If you’re starting a new business, it’s important to take the right preparatory steps to protect yourself and prevent legal trouble down the road. In today’s post, we discuss three key legal protections that any entrepreneur should have:
Select an appropriate business structure.
Choosing the right business structure is critical to protect your personal assets from any debts and liabilities of your company. Many new business owners assume they should register as an LLC, but this may not necessarily be your best option. Multiple factors–such as your tax situation, your personal assets, and your family situation–can influence which business structure will serve your best. As your business grows, if you encounter legal trouble, it could be fatal to your company without the right legal foundation in place. It’s worth consulting with a business attorney to make this decision.
Protect your goods and services.
As you’re starting your business out, it may be tempting to conduct transactions more informally or create verbal agreements with no terms. Such an approach can put you in a very risky situation legally. It’s critical to create a service agreement, which details what you provide, what your clients are obligated to pay as well as a clear return policy. In high-risk professions, it’s especially important to have a lawyer help you draft a comprehensive disclaimer–outlining what you do and don’t do, what you are and aren’t responsible for.
Protect your sensitive information.
If your business involves working with other contractors or vendors, you’ll probably find yourself in the position of having to expose others to your private information–such as passwords, client records or credit card numbers. You should be proactive about ensuring that no one can take such information and distribute it outside of your company. It’s crucial to have anyone working within your company sign a non-disclosure agreement at the onset of any working relationship.
Having a general counsel for your business can plan a critical role in helping you to develop your company and understand what new needs arise as you grow.