The business world is growing rapidly with competition making innovation and technology rampant as everyone scrambles for a piece of the pie. The idea of starting a side business as the economy continues to sink has created the avenue for people to come up with creative ideas that solve people’s problems. But, starting a business is not as easy as most people think. In fact, you will get in trouble with the law if you are not careful. Avoid these four mistakes when starting your business to be on the right side of the law.
1. Not having clear agreements
Business agreements include the documents you sign to show who owns and controls what in a partnership, to the contracts your vendors and suppliers sign. It also consists of the employment agreement you have with your employees. For instance, have you clearly stated what will happen when one of your employees is harassed at work, and they sue your company for it? Do you have clear policy agreements on what will happen if your executives are charged in a criminal offence? Consulting a Criminal Attorney Williamson County, is the best way to find out if your company is legally responsible if you, your partner, or employee is charged with a criminal case. For instance, if you registered a limited liability company, you can be charged for crimes you commit and your company will not be affected. Having these agreements available protect you, your partner, and business in case where something goes wrong and you find yourself in court. Although the dream is a little hazy when you start, consult a lawyer from the beginning to help you figure some of these things out.
2. Know the different business organization structures
Choosing the right structure is often overlooked, and when trouble comes calling down the line, you are unable to protect yourself or your business. You will suffer higher taxes or fall under significant liability if you are don’t consult a lawyer during this process. The most common and best structures are registering a limited liability company (LLC) or a corporation. These are not the only options so learn about partnerships, sole proprietorships and limited partnerships as well.
3. Ignoring securities laws
Understandably, you could have capital constraints when you start but handing out shares to investors, family, and friends could land you in trouble with the law. Talk to a lawyer and let them explain the intricate details of selling shares, from required disclosure agreements, forms, and filings you need to have in place. If you don’t comply with these laws, you will face heavy penalties that may include your company purchasing back all the shares you sold, at the original issuance price, losing your capital and crumbling your business. Before you get all excited and sell stocks, find out what legal laws you need to abide by so you don’t incur fines, penalties, and repurchase.
Thinking of starting a business is easy, but following through with all that’s required of you is not. Whether you will be financing your startup by selling shares or taking a loan, it’s essential to ensure you have met all the legal obligations.
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