Starting a business is an exciting and challenging venture. While you do need to plan for marketing strategies, product development, and cash flow, you should also take time to make some legal decisions. Here are three legal decisions you should make before starting a new business.
How to structure it
The structure of your business will influence many aspects of your business, such as the way it is owned, managed, and taxed. There are many different business structures from which you can choose; each has its unique pros and cons.
A sole proprietorship is the simplest business structure when it comes to registration and taxes. However, as a sole proprietor, you will be personally liable for business debts or legal court cases. If this is a concern for you, you might consider forming a business entity such as a corporation, limited liability company, or limited liability partnership. These structures are beneficial because you wouldn’t be putting your personal assets at risk if your business experienced financial hardship. As you decide on the structure of your business, make sure to carefully weigh the pros and cons, and choose the best structure for your own circumstances.
Seeking legal counsel
Another important legal decision you should make before starting a business is determining your business’s need for legal counsel. Considering the amount of risk in your prospective industry will help you know the type and amount of legal counsel you will need.
As you start your business, it’s important to invest in legal counsel so that you can make sure you’re abiding by the law in every aspect. Make sure you are getting the correct counsel for your taxes, creating your contracts, protecting your intellectual property.
How to Minimise Risk
Before you start a business, you need to understand the different legal liabilities you will be facing. Consider reaching out to a legal professional to help you assess possible risk factors in your business and make a plan to mitigate them. Possible risk mitigation strategies you might consider include choosing a business structure that limits your personal liability, investing in business insurance, and implementing a good quality assurance program. Planning ways to minimize your personal risk as a new business is an important decision you should make.
Your business will be more successful in the long run if you spend time deciding your business structure, legal counsel, and risk mitigation strategies. Talking to a professional about these aspects of your business will be beneficial and help you build a great foundation for your business in the future.
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