A business is a legal entity, and because of that, it will be subject to the laws of the land. It takes a lot to register a business the right way, but it’s imperative to do so. For a savvy con-artist, a legal loophole is the most natural thing in the world to exploit.
It’s all too easy to fall into the trap of doing something because it’s more comfortable, but that only marginally obeys the law. While it might save money in the short term, the long-term impact could be devastating.
Building a business is more than just having a dream and following it. You need to protect the business against anything that could occur, and that means being aware of what legal issues might arise. Bulletproofing a company legally requires that you follow the major pillars of the law.
Ensuring that you’re covered helps to give you peace of mind and makes sure that you can spend more time building the business and less time worrying about potential legal problems.
Incorporation as a tool
Incorporation, as defined by The Business Dictionary, is a method by which an intangible, artificial legal entity called a corporation is produced. The process of incorporation provides a level of abstraction between what belongs to the company and what belongs to the individual, i.e., you.
You don’t want the company’s actions to affect your private assets and vice versa. Additionally, any transactions regarding the business won’t have any hold on your assets. This separation is essential to protect your property by separating it from what the corporation owns.
Intellectual property considerations
Some businesses deal in the production of new ideas. In many of those businesses, employees are required to sign a Non-Disclosure Agreement as well as an acknowledgment that whatever they produce for the company becomes owned by the corporation. Drafting these agreements is a crucial step to protect the business against competition from its own former employees as well as leveraging its new creations on the open market.
Remaining on the right side of the law
A vast majority of corporations are limited liability companies, meaning that there’s an invisible line between what the company owns and what its shareholders own individually. In most states, corporations must conform to a series of steps to remain “in good standing” with the state. If they don’t fit those steps, that invisible line dissolves, and the owner and shareholders may all face fines on their private assets.
Get the right insurance
Business insurance coverage is one of the most important steps a business owner can take against liabilities. For some businesses, getting the lowest auto insurance is also a concern that registers significantly.
Chron mentions that a single mishap could potentially wipe out all the assets of a particular business, and having insurance guarantees against that mishap. In the case of a natural disaster, insurance may be able to cover the cost of replacing inventory or infrastructure. Insurance can also help a business’ reputation with their clients.
Employee rights and wages
Employee contracts need to be well-crafted to both protect the business and ensure that the employee knows exactly where he or she stands. Forbes advises that contracts allow the company to set boundaries and limitations on expectations.
This is especially important when it comes to dealing with employees since knowing their rights empowers them and allows them to make decisions that can aid their productivity as well as their well-being. Additionally, airtight contracts with employees give the business a solid foundation for future negotiations.
Write down everything
It might seem like overkill, but ensuring that everything is recorded can be essential in proving what a company has done. Having a paper trail can prevent or curtail lawsuits. It is imperative that a company documents every step it takes, regardless of how insignificant that step might seem.
Furthermore, having written agreements set out what the company expects and what is likely to happen if the employee or business partner doesn’t live up to the expectations of the contract. It puts all the signatories on the same level, considering what is at stake should the agreement fall through.
Bulletproofing using the law
While there is no guaranteed way to stop people from bringing suits against a company, setting a legal framework in place helps prepare the business for any lawsuits that may come their way. The law exists as both a warning and protection.
Having an experienced legal firm drawing up company documents and contracts is vital to the long-term success of the company. Legal battles should not impact the growth of a business because the company failed to protect itself adequately. The onus is on the business owner to ensure that his or her business can withstand any legal bullets that are fired in their direction.
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