Opening a new business is fun. We create our logo, sort out the vendors and suppliers, buy machinery or inventory, and begin selling through websites or shops. When the profit rolls in first, we conclude that all our hard work has paid off.
While setting up a business seems easy, the legal requirements often make it much more complex than what’s described above. No matter where you’re starting a new business, you must fulfill a few basic legal requirements before kickstarting the operations. Breaking laws can seriously harm your business and its reputation whether you go for a case or an out-of-court settlement. Below are the top six legal requirements a new business should be mindful of.
Finding the perfect legal structure
The first legal requirement for your new business is to find the perfect legal structure. While it might seem like an insignificant issue while you’re just starting operations, it holds much significance for your business. The amount of tax you pay, your relationship with the other stakeholders, your liabilities, and how you operate the business – all depend on which legal structure you follow.
A limited company or LLC is the most popular form of legal structure worldwide, in which the company has its entity. Sole proprietorship and partnerships are also popular choices, but the owners are liable for any losses incurred.
Registering a trademark and obtaining a license
Trademark registration is another much overlooked legal requirement of a new business. Many new business owners think that registering their business and domain name does the trick. But to protect its business identity and distinguish its products or services from its competitors, the company must register its trademark.
The trademark registration process is easy. If you’re unable to find your way, you can always contact firms that help you register your trademark with little to no hassle. They will collect information about your brand, do all the paperwork, and register the trademark with the trademark office.
Similarly, you must collect all licenses required for operating a business. A basic trade license is sufficient for many businesses, but you might need to obtain a few more for food and beverage businesses. Check with local officials for more details.
Abiding by the zoning laws
If you are opening a shop or a restaurant, you must check the zoning laws of the location of your business. The area you have chosen must qualify to house the type of business you have chosen. Government officials of the locality can help you with proper information. Don’t open your business without checking the zoning laws. Often you will find businesses similar to yours in the area and might assume that yours is good to go. However, zoning laws can change over time, and old businesses might be excluded from the new law. Your business might not fall under the new rules.
Establishing terms of use and privacy policy
Whether you’re selling products through a website or creating a digital product, your users will require terms of use and privacy policy before they can purchase from you. Websites and apps collect a lot of information from their users which you can use later to drive more leads and sales and find loopholes in the service. Your customers have a right to know how much and what information they are sharing with your business, and how much of it you’re making available to third parties – if any.
The terms of use also dictate how the user interacts with your business. If you sell products, you might need to lay out shipping details and return policies.
Establishing rules for contractual partners
Your business will deal with many vendors or contractual partners every day. If you have a retail business, you will need suppliers. If you’re manufacturing products, vendors will supply you with raw materials. You can also have Marketing and head-hunting agencies as your partners. Whoever they are and whatever their number is, you should form basic rules and conditions for contractual partners.
If needed, take help from a lawyer to determine the type of partnership, its duration, compensation – if any, collection and use of sensitive information about the business, and termination rules for the partnership. A generic format will help your business initially, but it’s better to have separate contracts and conditions for each type of contractual partner for your business.
Creating employment laws
Before you hire people for your business and begin the operations, you must set basic employment laws for your employees. The government already has a guideline for employment laws, but they can vary depending on your business and the industry.
You can check best practices followed by the industry leaders and chalk out the payroll, leave, gratuity and bonuses, additional perks, and healthcare benefits.
