Why Business Should Always go Legal? Importance of Legalities
Setting up a business is itself a difficult task but protecting it is way more complicated. Of all the business plans you make, always give priority to the legal aspects. It doesn’t matter if you are setting up a new business, planning to expand the existing one, buying or selling a firm, or needing new investors; you must always ensure that your business is legally protected.
It might be a little costly, but it will be better to prevent your business from any legal problems in the future to save a more expensive deal. Following are the steps to ensure a legally sound foundation for your business:-
3 Common Legal Issues in Businesses
- Payment Issues According to statistics, about 30% of invoices in India are paid late. How can a business track down clients and encourage timely payments? One easy way is by filing a lawsuit for collection or delivering ‘Past Due’ reminders!
Some Important Pointers:- Establish clear payment terms and get a customer to sign them. This will act as official proof that the client was aware of the requirements before they were implemented.
- When a client is late on a payment, send a courteous First Payment Reminder Letter to remind them of their financial commitments.
- Draft a Second Payment Reminder Letter as a follow-up if the payment is not completed after the initial reminder.
- Business Structure Issues The foundation of all future work and policies you will construct and design for your organization defines corporate structure. It also impacts your taxes and the degree of your liabilities if you are sued. As a result, the initial decision is to register your business.
- Intellectual Property Issues Intellectual property (IP) refers to legally protected creations by patents, trademarks, and copyright, allowing its creators to profit from their work. If the proper formalities are not performed, a company’s establishment may be lost to another company.
Similarly, if a business owner fails to conduct market research and fails to register its intellectual property (IP) such as trademarks or patents, they may be sued for infringement by another company or an individual who believes (and has sufficient proof) that their product or company name, logo, tag line, or product name is unauthorized.
How to Make Your Business Legally Good? 6 Ways
- Appoint a Legal Advisor A legal expert is necessary to handle all the legal matters related to a firm. Whether it is about the activities you intend to carry out, laws about your business, type of entity need, taxation, insurance, etc., a legal professional can help you with all the legalities.
- Selecting a Legal Entity Forming your business into a legal entity is extremely important since this would affect legal liability, tax implications, costs of establishment, and future investment. You will need to form your business into an entity such as a private/public company, partnership, sole proprietorship, or limited liability partnership based on your business ideas and future plans.
- Draft a Sound Business Plan Prepare a business plan thoroughly, which would act as a blueprint for potential investors and partners. The objectives should be realistic and must be within an approachable timeline. Cover the market strategy, financial scopes, and legal aspects.
- Protect your brand The next step would be getting a trademark for the most classifiable feature of your brand – it could be anything like name, logo, tag line, etc. because the brand is how your customers will identify your product. So, you better protect the reputation of your firm from the start.
- Ensure that the core legal documents are in order The core legal documents contain the name and address of the business, the name of the persons involved (directors and shareholders, respectively), and how they own the business. The proposed activities of the business and responsibilities of the persons concerned should also be specified unambiguously and factually as these documents lay the foundation and would govern the entire business.
- Legal agreements There are several business relationships for running an efficient business. It is essential to ensure that legal agreements are watertight and appropriately drafted, as both parties must understand the terms and responsibilities they agree to be bound by.
Important Agreements
- Founders Agreement
- Partnership Agreement
- Employment and consultant document
- Vendor or service contract
- Non-Disclosure Agreement (NDA)
Legalities in Business: Top Importance
Corporate law is critical in ensuring that a country’s business operations are regulated. Here are some examples of why business law is so important:
- Compensation To handle diverse compensation issues in an organization, business law is required. An experienced business attorney can assist businesses in resolving compensation and salary management concerns. It is the attorney’s job to ensure that their client does not break any compensation or benefit laws at any costs. If there are any differences, the repercussions might be fatal.
- Protect Shareholder Interests When it comes to protecting the rights of a company’s shareholders, business law is critical. Conflicts involving minority shareholders, constitutional papers, and arbitration settlements, among other things, can be successfully handled by an expert company law practitioner.
- Business Foundation Business law serves as the cornerstone of any business venture. A lot of legal paperwork, leasing, and permits go into starting a business. A business law attorney is familiar with the necessary regulations and can assist the company in adequately launching its activities.
- Requirement for Government Work It is a requirement for developing a high-quality official statistics system. The existence of a robust legal framework, for example, is the first element of the quality assurance methodology proposed by both the Statistical Commission and the IMF Data Quality Assessment Framework (DQAF) for Balance of Payments and International Investment Position Statistics.
- Client Confidence It is likely to promote public confidence in the confidentiality of reported data, facilitating accurate data collection and increasing response rates. In collecting, preserving, and disseminating statistics and related microdata, statistical secrecy is essential. As a result, the legislative framework should include regulations ensuring personal data protection and limiting their use to official statistical purposes only.
Legalities in Business: Protector of Times
The points mentioned above are the basic necessity of a legally sound business. There are more exhaustive things to consider which only a legal advisor can explain. If you haven’t done any of these things, START NOW with the first step to avoid future problems which can adversely affect your business.
Remember, prevention is always better than the cure!
