It is essential for small businesses to be aware of legal roadblocks that they might face. Let’s look at some tips to ensure your business’s smooth sailing.
Form a separate entity
The choice of entity determines taxation and sale of your business. Ensure that your business is structured separately from your personal assets so that you are not personally responsible for business debts that you might incur.
Maintain proper records
All businesses are required to have their organizational documents in place, such as records of payroll, business decisions, bookkeeping, etc. Here, ensure personal, and business finances are separate. Well maintained documents regarding company and stockholder agreements will help limit disputes among owners.
Adopt a buy-sell agreement
There is a possibility of an ownership change of the business due to some trigger event such as death, termination of employment, bankruptcy, etc. This agreement helps evaluate the business and facilitates an orderly acquisition in the face of such events.
Investors and Securities Law
Be wary when choosing investors, and do so in accordance with required securities law disclosures. If not, disputes between owners and investors, or loss will lead the investors to sue you for damages.
Have written contracts
Verbal agreements are impossible to keep track of, prove or enforce. Document all agreements in written formats, detailing obligations and potential issues, as well as modifications or extensions as required.
Require employment and independent contractor agreements
Businesses should be aware of compliance with various employment regulations. Ensure the protection of your assets, plans, and the like so that employees and contractors do not steal them from you. This also protects your company from possible employee lawsuits.
Review non-compete agreements
A review of non-compete agreements signed by you, your employees and contractors will shed light on their applicability to your business.
Protect intellectual property
Intellectual property may be critical for the future success of your business. Ensure that employees and independent contractors sign over new technologies and process, and properly register trademarks and licenses of the same.
When working with other businesses or individuals, obtain non-disclosure agreements from the other party to protect your business’s confidential information.
Try to negotiate disputes rather than go for expensive litigations by taking necessary steps to prevent disputes as far as possible.
Get legal advice
Do not skimp on the expenses to prepare proper documents and contracts with the help of proper legal aid. Always seek legal advice before making important business decisions.