Starting a successful business takes time, money, patience, determination, and a healthy dose of luck. Getting off to a good start also means being prepared for any number of legal challenges. More than 13 million, or nearly 60% of small businesses have experienced significant legal events in the past two years. As a LegalShield member, your provider law firm can help with debt collection matters, document review, and many other issues common to small businesses. If you’re starting a new business, these tips may help you avoid common startup challenges. If you have questions or need legal assistance call your LegalShield provider law firm.
- Business Entity Formation – While sole proprietorships may not require you to formally register your business, they may put your home, personal savings and other assets at risk in the event your business is sued or cannot repay a debt. Partnerships may expose you to greater liability because you are also responsible for certain actions of your partner(s). There may be significant benefits to forming a limited liability company (“LLC”) or corporation. These types of entities may benefit you in regard to personal liability, taxation and protection of personal assets. Consult with an attorney or CPA to determine which business entity, if any, will be most beneficial to your business.
- Selecting a Name – When selecting a business name, it is important to consider what it communicates about your business and how the name will appear on your website, promotional material and letterhead. Review the websites and content that will appear when a potential customer searches for your business online. It is also important to make sure the name you select does not violate an existing trademark. The United States Patent and Trademark Office offers a search tool to help. If you are forming an LLC or Corporation you will need to check the name availability with your state corporation commission or secretary of state. Some states will allow you to reserve a name for a certain period of time before officially registering the business. The U.S. Small Business Administration offers a list of links to the various state agencies responsible for registering businesses.
- Funding – Whether you are starting a business or preparing for an expansion, your business may require additional capital. A small business loan is one way to secure financing. Simply having a great idea for a business is not enough to secure a loan. You must understand what lenders are looking for and prepare accordingly. The SBA offers a useful Business Loan Checklist that explains some of the information and documentation you may need for a bank loan. Crowdfunding is an increasingly popular way to raise capital from a much larger pool of online investors. If you are considering crowdfunding it is important to understand the differences between contributions and reward-based funding, as well as non-equity and equity-based funding.
- Permits & Licenses – Before you begin operating a business, check with your state or provincial regulatory agencies to ensure that you have the authority to proceed. Certain businesses require special licensing or certification. Failing to properly register or license your business could lead to fines or legal action. State laws vary greatly so it is important to research how your industry is regulated in many states and localities where you do business. Call your LegalShield provider if you have questions about the laws that apply to your business.
- Insurance – There are many different types of coverage you should consider, from general business liability insurance to business errors and omissions insurance for directors and officers. Depending on the number of employees and state or provincial laws governing your business, you may be required to purchase workers’ compensation insurance. You may also need to pay unemployment insurance. Talk to an experienced insurance agent and become familiar with best practices and the regulations that govern your industry.
- Intellectual Property (IP) – IP laws can be incredibly complex, but they should not be ignored. Make sure you understand what can be done to protect your IP. Copyright laws protect the intellectual property of artists, including written text, photographs, paintings, and designs. A copyright is established when a work is completed. Trademarks protect the design, name, words, and phrases used to identify your business and products. Patent law exists to protect innovations or inventions from reproduction without permission or compensation. Both trademarks and patents require registration with the United States Patent and Trademark Office. Visit the USPTO website or call your provider law firm for more information.