A solid legal foundation is critical in protecting your business and avoid business legal issues. Vague language and missed clauses can come back to haunt you in the form of lawsuits or lost revenue.
In this series, you will learn how to build a legal foundation that your clients can depend on. From getting a retainer to putting policies in place, this series will provide you with everything you need to start your business off right!
1. Get a Retainer
A legal team on retainer is the best protection against unforeseen events that can happen in business. A legal team can protect your assets if the unthinkable occurs, as well as save you time and money by being able to handle issues from the start.
Foundation start-up legal assistance includes the creation of the foundation’s articles of incorporation, trademark applications, and non-disclosure agreements. It also includes the establishment of its bylaws to define the structure of the foundation and how it will operate.
2. Have a Contract in Place
A business contract is an important legal document that must be written properly in order to be valid. Vague language, missing clauses and other contract defects can come back to haunt you in court or cause costly problems with your customers.
Contracts can be verbal or written. However, it is always best to insist on a written agreement in any circumstance. This prevents misremembering of terms and gives you evidence in the event that a dispute over the contract arises.
A well-drafted contract should include details about payment. It should also state that any disputes will be settled according to the laws of a specific jurisdiction (called a choice-of-law provision). This is important because different states and localities interpret contract law differently. This is the only way to ensure consistency in legal decision-making. This is especially important for small businesses, startups, and independent contractors.
3. Have a Policy in Place
Many small businesses think of lawyers only when something goes wrong, but a lawyer can help you lay a solid legal foundation from the get-go. A lawyer can help you establish the agreements and structures (operating, shareholder’s, or buy/sell) that organize how business is conducted and how owners interact.
Ensure that your policies comply with local, state, and federal laws. Failure to adhere to these regulations can lead to serious financial penalties.
4. Have a Liability Insurance Policy
The legal foundation of your business can be strengthened through obtaining liability insurance, which covers attorney fees and costs associated with defending your company in a lawsuit. It will also cover compensation to anyone who is injured as a result of your business activities, whether or not the claim has merit.
Having the right legal structure established from the beginning is crucial to protect your personal assets and limit your liability. They can assist you in setting up the appropriate entity and help establish agreements that will govern how the business operates, how owners interact, and what happens to the company should someone be disabled or die. They can also help you obtain a trademark and prepare non-disclosure agreements.
5. Have a Privacy Policy
Any business that relies on its website for sales or customer outreach should have a privacy policy in place. This isn’t just a legal requirement, it’s also an opportunity to show that you value your customers.
Your privacy policy should explain what type of information you collect, why you collect it, how you use that information, and who may have access to it. It should also include a way for your visitors to contact you with questions or concerns.
Consumers are becoming more and more savvy when it comes to their personal data, so your privacy policy should be written in plain language. Look for blank templates online that you can use as a starting point. Then customize it to your own business needs. Ensure that you keep it up to date and notify your users or visitors whenever it changes.
6. Have a Business Licensing Policy
A foundation can be a unique legal entity that can accomplish charitable and educational objectives. However, there are specific requirements that must be met before a foundation can be established. These include articles of incorporation, trademark applications and non-disclosure agreements.
The best way to protect your business and your assets is to have access to a reputable legal team and to establish the proper legal foundation from the beginning. This means having your attorney on retainer and establishing the appropriate legal documentation. It also means having an insurance policy in place to protect against potential lawsuits that could occur in the future.
7. Have a Business Bank Account
A business bank account can help protect your personal assets in the event of a lawsuit, and it makes you look more professional to your clients and the IRS. Plus, it can simplify tax time and make it easier to track your business expenses.
Having a separate account will also give you peace of mind that your business is really its own entity. It doesn’t protect you from all of the liabilities that come with running your own business, but it can help you establish your brand as an official legal entity and help you prepare for future growth.
To open a business bank account, you’ll need to have your business paperwork ready. This includes your state-issued license, any partnership agreements or other documentation and a copy of your business name registration. Also, some banks may require a minimum opening deposit or maintenance fees.
8. Have a Business Insurance Policy
Whether you’re a brand new business owner or have been in the game for awhile, having access to a good legal team is key. The cost of a retainer should be worked into your budget to ensure you are protected in case anything goes wrong, from minor infractions to major scandals.
