There are a lot of steps to be considered while starting a business. Inexperience in the terms of understanding business legality can be particularly costly for business entities.
Legal literacy involves knowing the constraints and possibilities that come with the law. It is a basic level of understanding of business laws that regulates the marketplace.
As a business owner, it is your responsibility to take conscious steps in which you can limit the risk factors within your business. But how do you limit the possibilities of an infringement or a lawsuit?
Listed below are six things you can do to keep your business safe.
Find Out if Your Business Needs a License
You should check if your business needs a license. Home-based businesses like freelancing might not need a license as licensing only applies municipally. A little research on licensing can improve your legal literacy in this regard.
Whether as a specialized company or one that conducts general trade, you can consult a business lawyer about your license. He or she will help with legal counsel. Always do your consultations to keep your business on the safe side of the law whether you run a startup or multinational corporation.
Incorporate Your Business as a Legal Entity
You might have started as a sole proprietor of a small business. However, as your business grows, it is important to get help with legal information on the best structure for the business going forward.
A sole proprietorship usually is a one-man business. This structure does not give you long-term protection for your assets. Your business should have a separate identity outside your personal assets.
With a sole proprietorship, in any form of conflict with a client, you are liable to lose your personal assets like savings and properties. You can get better protection by becoming incorporated.
A few benefits of incorporation are:
- Access to Capital
It is easier for corporations to borrow money at lower interest rates. You can raise capital by selling shares to your investors.
- Lower Tax Rates
Corporate tax is generally lower than personal income tax rates. The corporation is taxed independent of the owner.
- Continuous Existence
A corporation is better protected to outlive the owner and continue existing as an entity. It is not the same with a sole proprietorship whose lifespan ends after the owner’s demise.
Hire a Good Attorney for Your Business
You will need someone with enough legal literacy to handle the legal affairs of your business. You don’t have all the time to monitor every detail of the business, especially if it is a large-scale enterprise.
An attorney is a skilled practitioner trained in the law who can give appropriate and timely legal counsel.
As a small business owner, you might not need one. But, when you need to resolve issues fast, you will need to hire a lawyer for legal counsel. You can delegate the legal concerns of your business to him.
Get Your Business Insured
There is no crystal ball for predicting commercial risks. Protect your business from risk factors by getting business insurance. Commercial insurance is important for managing risks since the future cannot be accurately predicted.
Depending on the structure of your business, you might need to insure your workers. Take stock of your business risks, and create a list of potential losses and company liabilities.
Some types of insurance policy to consider:
- Commercial Property Insurance
All businesses have physical assets. Therefore, commercial property insurance is a necessity. The possibilities of theft, flood, fire outbreak, and property vandalism abound in the business world.
So, it would be wise to consider insuring against these possibilities. You can seek legal counsel from your lawyers to help in the process. Since assets are fundamental in business, you have to ensure the safety of those assets against risks.
- General Liability Insurance
From time to time, the best businesses can find themselves in trouble with customers. Your business can be held liable for damages caused by your product or employee.
All it takes is one big scandal to sink the company you’ve labored to build from scratch. That’s why you need general liability insurance. It covers the cost of defending yourself against injury or damage lawsuits.
Safeguard Your Intellectual Property
Creating a strong brand is all about identifying your core principles. What kind of value does your business give? Which values keep your customers loyal?
Your unique brand could be depicted in the logo, name, motto, or design. These are intellectual properties that make your business stand out from the competition. While your office is a tangible substance, your business logo is a creation of the mind, hence an intellectual property (IP).
Protecting your IP stops others from using it without your permission. You will need to hire the services of one with legal literacy on how you can copyright or trademark your business intellectual properties.
Make sure to protect your business IP by using:
- Copyrights
It protects your creative works like videos and books. It grants you exclusive rights to the usage.
- Trademarks
They are words or symbols that protect recognizable features of your business. A trademark legally stops competitors from using similar words or symbols.
Invest in Cyber Security
Aside from investing in legal literacy and what it can do for your business going forward, you also need to invest in cyber defense. It will keep your business beyond the reach of hackers and cyber lords.
These hackers may try to steal employee profiles or information on the customer base. They can also try to steal business classified files and other legal information.
Protect your employee and customer profile by securing databases.
You can do the following:
- You can install appropriate firewalls.
- Create strong passwords and set timers on logins.
- Train employees in cyber security measures.
Conclusion
Your business is better protected following some of the strategies discussed above as well as educating your team on legal literacy. You and your employees should be prepared in case of a future dispute. You can better learn to control your assets and liabilities, secure your client base, and protect company information with the tips provided.
