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How To Make Sure Your New Startup Business Is Legal


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When you think about starting a new business, you’ll have dozens of things to think about. You might not know it. But, new startup owners seldom consider the legal aspects of their new enterprises. As a result, they could find themselves in legal hot water.

Let’s face it. Entrepreneurs are interested in making money and increasing brand awareness. They don’t wish to get bogged down in paperwork. Still, startups need to ensure they don’t make any problematic legal mistakes. Here is how to make sure your new business is above-board:

Make a legal definition of each person’s role.

Are you starting up a business with one or more people? If so, you need to define each person’s role. And you must do so in writing. But, what is that so important? After all, surely everyone knows what they’re doing anyway, right?

If there is no written definition of each person’s role, problems can ensue at a later stage. For example, let’s say a rift between you and one of your business partners develops. What if you are complaining that you are always doing their share of the work? You might decide they don’t deserve to receive the same level of pay or dividends as you.

Should the issue go to court, you can prove what they were supposed to do. That’s because their role got defined on paper during the startup phase of your business!

Hire a tax attorney.

Running a business usually means you have to hire an accountant. Their job is to take care of your financial affairs. Plus, they must ensure your firm is running in a tax-efficient manner.

What happens if the IRS decide to investigate your tax affairs? Perhaps your accountant did something wrong with your company’s tax return? A tax attorney can ensure that you don’t end up entering a legal minefield.

Choose the right legal entity.

During the startup phase of your business, you will get faced with one question. Should you be self-employed or launch an incorporated company? Both options have their pros and cons.

For instance, staying self-employed means that your tax affairs are simple to manage. Plus, there is less bureaucracy to deal with from the government. But, if you become a company, you’ll pay less tax. And you’re more likely to get lucrative contracts from big clients if you’re incorporated.

I recommend talking things over with a business advisor. They can help you decide which legal entity is right for you and your needs. Don’t just do a quick Google search on the subject. You need to make an informed decision!

Use a standard contract for your clients.

It doesn’t matter whether you’re selling a product or service. It’s important that you have a standard contract you can use with your clients.

Why? The answer is simple: to cover your back from a legal perspective! Contracts define the terms and conditions surrounding the supply of goods and services. They detail your obligations, and the things your clients need to know.

You should talk with a business lawyer to draw up an appropriate contract for your firm. It must also be “watertight” in a court of law.


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