Small Business Legal Tips Regarding Funding and Contracts
When starting a small business, it’s essential to take all the necessary legal steps to ensure your business is set up correctly. Following the right process from the beginning will help keep your company compliant, and set it up for long-term success.
Check out these legal tips to ensure your small business has the right funding and contracts in place.
1. Be Cautious When Accepting Funding
For small businesses, especially startups, accepting funding to get up and running can be necessary. However, some risks can come with this. Before accepting funding, you need to understand the implications of each type of fund, including loans, grants, or investments. Each type of funding comes with a different set of rules and regulations to keep your business compliant. It’s crucial to work with an attorney to ensure you are following the correct rules and regulations and are handling the funds correctly.
2. Setup the Right Business Entity
When creating your business, you need to select a business structure. You need a lawyer – and possibly an accountant – to help you determine if you should be an LLC, S-Corp, or C-Corp. The type of entity you select has a lot of implications, including tax obligations or liabilities.
3. Establish and File Legal Documents
You must create, complete, and file proper legal documents when starting a business. Depending on the type of business entity, different requirements must be met. For example, for an LLC you must file articles of organization. You also need to file paperwork regarding taxes, payroll, labor laws, safety requirements, licenses and permits, and other rules. A business attorney can help ensure all of the necessary forms and documents are completed and submitted.
4. Establish Written Contracts
It’s essential to formalize all agreements with written contracts. While it can be tempting to take people at their word or through their handshake when making agreements, it’s crucial to put all business dealings in writing. This makes the agreement legally enforceable. If the party doesn’t hold up their end of the contract, you can hold them responsible.
5. Understand Employment and Contractor Laws
New business owners can quickly make critical mistakes when it comes to employees or contractors who work for them. There are numerous legal steps you must take to avoid penalties. You must understand the difference between an employee and a contractor, and have each person submit required documents, including W-9 and I-9 forms.
6. Protect Intellectual Property
If you have original work at your company or have a unique logo, branding, or even your business name, you need to establish a copyright, trademark, or patent to protect it. Legally protecting your intellectual property – including software or products – lets you take legal action against anyone who copies it.
7. Put Employee Handbooks in Place
If you disclose product information to your employees, or if they have access to confidential records, you need to put employee agreements in place to protect your business. An agreement can prevent employees from taking your ideas and giving them to a competitor or using them for their benefit. An employee handbook will establish policies that you can use to protect yourself and your company.
8. Hire a Small Business Lawyer
To ensure you are following the correct steps when setting up your new business, you need to hire an experienced small business attorney. They can help you create and file the documents, and make sure all legal requirements are being met.
Why Hire Us to Help Your Small Business
When establishing a new business, make sure you comply with all laws and mandates. Hire our business attorneys at Johnstone Adams LLC to help you.
Ranked in the 2023 U.S. News – Best Lawyers® “Best Law Firms” list regionally in 12 practice areas, we have experts in many areas of law to give our clients top-notch representation. In business for more than a century, our firm can mix its experience with the ability to evolve with the changing times.
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