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Small Business Legal Advice
From Adviceopedia
Here you will find some general small business legal advice. Often small businesses don’t have much of a budget for hiring a professional lawyer or legal consultant. Hopefully our list of tips can help you better understand some of the basics; but for the ultimate in small business legal advice, the best counsel is to consult a local legal professional who specializes in your specific concern.
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Small Business Legal Advice and Tips
Start a Relationship
Even if the initial cost may be a stretch, it is important to establish a working relationship with a small business attorney or legal professional. Consider hiring someone to look over your initial documents or offer an opinion on your employment agreements. By setting up an account with a local lawyer, if you do have any reason to formally hire someone in an urgent situation – you already have a contact.
Determine Which Legal Form of Business is Best
There are four main types of businesses: sole proprietorships, partnerships, corporations, and limited liability company (LLC). When first starting your small business you will need to pick one. But, as your business grows and changes, you will want to also want to continue to evaluate which form best suits your current situation.
Determining the best type is a complicated, but extremely important concern. The following list will give you the main pros and cons for each type:
- Sole Proprietorship:
Pros: Simple and inexpensive set up
Cons: Unlimited personal liability, and the business and owner are one and the same
- Partnership:
Pros: Minimal paperwork
Cons: Unlimited personal liability and if one partner leaves, the business could quickly dissolve
- Corporation:
Pros: Legal separate entity, limited personal liability, separate tax structure, and potential for attracting additional investors
Cons: Complicated and more expensive set up, potential for double taxes, and multiple types requiring additional research
- Limited Liability Company (LLC):
Pros: Limits personal liability, tax flexibility, and offers a variety of management options
Cons: Newer evolving business set up, multiple choices and complicated set up, stock options are not available
Co-Ownership
If you will be sharing the ownership and managing your business with others, it is important to establish a formal written agreement regarding potential ownership changes. Typically known as a buyout agreement, it can prevent struggles and problems down the road. While in the beginning, it may seem like everyone is in for the long haul – life has been known to take uncertain turns.
Business Names
Before selecting or changing your small businesses name, contact your state legal office. The laws governing business names and product labels are managed differently state by state. Keep in mind that a business name and trademark are two different things.
Trademarks
The legal structure surrounding trademarks is more protective than a business name. But, if you use your business name to identify your products and services, it begins to become a trademark. To save yourself certain headache and possible lawsuits later, seriously research all names you associate with your business to verify no other company already uses that name. Once you have identified your key trademarks, contact your state and legally set claim to these brands.
Licenses and Permits
The foremost focus here should be research. It is something that you can do yourself or hire an expert. Mainly you will want to make sure your business complies with all local and federal regulations. Double check the following in your area:
- Tax Registrations – income taxes for employees as well as sales tax regulations
- State and Federal Laws regarding licenses and permits – different businesses and jobs have a variety of requirements. Make sure you check with local and federal offices, as well as business associations.
- Zoning Ordinances – this is particularly important if you will be running your small business as a homebased business. A quick call to your local zoning office should answer all your questions.
Business Insurance
Don’t skimp on business insurance. While many of us hate to “throw” money into insurance, this is important small business legal advice. Insurance is there for a very important reason – to protect you from catastrophe. Ideally, you never want to have to use it, but if you do, it will make a bad situation better. Businesses are often larger targets than the average person, don’t let yourself become a victim in this sue happy world.
