Starting your own business is like living your longtime dream but your dream easily becomes a nightmare when you think of the legal angle. Well, corporate law and legal paraphernalia can boggle the most sensible and sorted entrepreneurs. So, it is not a big deal at all if you are getting goose bumps but if you overlook the legal aspect or deal with it casually, you are bound to encounter troubles in future that may also destroy your dream forever. So, it is mandatory that you do your homework in this aspect.
Of course, it will take up a good deal of your time and energy but it will also ensure a rock-solid foundation for your enterprise. So, do not back out. Take the bull by its horns. To help you out, we have compiled a legal to-do list that every business owner must memorize.
- Select a name
It might seem very insignificant and many businessmen think that the company name is limited to thinking of something unique or catchy or cool. Well, coming up with a catchy name is certainly important for it affects you as a brand but legal implications are also associated with your entity’s name. First of all, you need to think of several names and then search the database of companies to find out if your proposed name is available or has been taken. Once you finalize a suitable name, you should get it registered with the appropriate authority. After this, you should go after the domain name. Google search to verify the availability and then register it through a domain service.
2. Choose the business structure/type
Whether you want to operate as a private limited company, sole proprietor, partnership, limited liability company (LLP) or in any other manner has to be decided beforehand. The company structure is a very important matter as it will have an impact on your liability, taxation, profits, succession planning and many more things. You should finalize it after taking the business nature, funding needs and risk involvement into account. To get more insights, do consult other businesses, lawyers or accountants.
3. Get license
No business can operate without a license and you need to get one from an appropriate authority in your city or state or town. You must know about the timeline, requisite documents, clauses and other related tidbits to procure the license. The license and permit laws are a little complex and you have to tread the territory carefully. So, you might need the help of an expert such as chartered accountant or corporate lawyer.
4. Create founder’s agreement
As is the trend, most businesses are helmed by two or more than two founders, who makes for a prudent strategy but it also makes complete sense to get everything in writing. You must put together a founder’s agreement in the proper way as soon as you go ahead with the setup formalities. The agreement must carry clear explanations regarding ownership, liability, intellectual property and other important matters. Consult a legal professional for best advice and notify all the owners before finalizing the draft.
5. File for patent/trademark
Many businesses, in the present times, revolve around an idea or intellectual capital which makes you vulnerable as well. The corporate world is full of cunning crooks who do not mind harvesting money from another’s concept. So, it is important to protect the core of the company. Your idea is a valuable asset and needs to be safeguarded under all conditions. So, whether it is the patent of your products or trademark of your logo, you must get things in place.
6. Get a business account
Finances are the lifeblood of a business and to ensure smooth running, it is very important that you do not mix personal and professional finances. So, get an account opened in the name of your business and make sure that all the professional transactions are made through it. It will also help you in getting tax benefits, concessions and other facilities provided by banks to businesses. You will also be saved from fines and other legal troubles.
7. Set up the contracts
A business enters into multiple contracts with multiple people and entities in order to operate successfully. They may be suppliers, agencies, clients, distributors, marketer, workers, etc. These contracts are loaded with legal obligations and you can be held accountable if you fail to follow them. So, it is important that you enter them after careful assessment. Do get legal help if you do not understand anything or are unsure and also learn some contract law.
The detailed to-do list mentioned above does seem challenging but if you want to become the showman of your niche, you have to master it. All the tasks are important and the sooner you finish them, the closer you will come to your dreamland.
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