In today’s day and age, having a great idea is not enough for a new business to prosper. You also need the right target market, adequate marketing, and advertising, and a sound business plan. Most importantly, you need to be aware of the law and how this relates to your particular industry and organization.
Three important legal aspects to consider when starting a new business are selecting the right business entity, protecting yourself, and the proper gathering and management of data and information.
Selecting the Right Business Entity
From a legal standpoint, there are plenty of ways in which you can start a business. The most common are sole proprietorship, general and limited partnerships, limited liability companies, and corporations. If you are starting a company on your own, the best option is to register your business as a sole proprietorship. If it’s more than one person you could either go for a general or limited partnership.
The first two are pretty straightforward. But, it gets a bit tricky once you look at the other options available and your specific situation. Imagine for example that you have a great idea in mind and you made a business plan. Yet, you don’t have money to execute this idea. One option to look into would be to sell your idea to a wealthy investor or business corporation. A second alternative is to work together with the investor or the organization by creating a partnership with different investment capabilities.
Having said that, there are different things to consider. The idea is yours but the money isn’t. In this case who gets to make future decisions? What if the idea expands into something else? What if the company doesn’t want you anymore? These and other questions can only be answered by a seasoned business law attorney. A reputable one will not only guide you on the best business entity to choose but also give you insight into future legal ramifications and the risks involved in them.
Protecting What is Yours
Once you know what kind of business you have in a legal sense, the next most important thing is to protect it. The key is to understand that what belongs to you is not only what you can touch. Sure, if you are Steve Jobs or Bill Gates, a computer or telephone and the research behind its development is your most precious asset. However, if you don’t have a machine, a car, a robot, or an electric shaver, it doesn’t mean it is less valuable. Remember, all great things come from ideas, and all ideas need research, commitment, and time. As such, don’t let others take them, at least not for free.
If you invested time and money into developing a study, creating a service, or simply brainstorming a business concept, protect it. Research intellectual property and what it entails. Find out if you can safeguard your designs, logos, and catchphrases and for how long. Not only will this save you a lot of money but also avoid legal headaches in the future.
Data Management and Information
The last thing a start-up business wants is to be on the receiving end of a lawsuit. In 2016, Finnish telecommunications giant Nokia sued Apple for copyright infringement. In return, Apple had to pay over 2 billion dollars. Is this something your business can afford? Even if it did, wouldn’t you want to spend this money on something else, something that benefits your organization?
There are two ways to protect your company from such costly mistakes. The first is to have the right information. No court will accept ignorance as an excuse for breaking the law. So, find out what you can and what you can’t do. Look into the legal consequences of your decisions and your actions. Gather as much information on your industry as you can and study it.
Second, keep everything. This includes receipts, contracts, reports, notes, and anything else that can be stored either physically or online. Look into cloud computing solutions like data management and archival cloud storage. There is no better way to protect yourself in front of a judge than by having hard evidence.
When starting a new business, three legal aspects to consider are choosing the right business entity, protecting your products and services, and having the right data management tools to gather and process information. Others include having detailed contracts with customers and employees and doing research on local and regional business law.
Even if you do that, there is no guarantee your business will succeed. Great ideas often fail because of bad timing, unexpected disasters, and luck. Still, the last thing you want is for your company to crash because of negligence and things you could have easily avoided.