If you’ve started a business or have thought about starting one, then your mind will be a flurry of activity, as you try to put your ideas into practice. It’s an exciting time, one that feels it consists of unbound possibilities. This feeling, however, is just a mirage: you do not have unbound possibilities because they are bound by the law.
While the nation does generally try to promote enterprise, there are set rules you’ll have to follow, both to prevent falling foul of the prosecutors and opening up yourself to attach from other companies.
Whenever you do anything connected with your business, remember that you’re not out there alone, trying to make a mark in the world: you exist in a complex system of systems, which relies on everyone playing by the rules to succeed.
Below, we take an in-depth look at the common and not-so-common legal issues that every business needs to be aware of.
Get the Right Structure
You might not be too concerned with the structure of your company, to begin with, especially if it’s just you a couple of employees, but finding out which is the best one for your business as soon as possible will help prevent headaches further on down the line. If you’re not convinced that it’s important, just think about how much your entity decision can impact: how much tax you pay, your liability exposure, and quite simply how much paperwork you have to do.
If you’re looking for a simple ‘set up and go’ type of structure, then a sole proprietorship structure will be best; the requirements are few, and you can be up and trading in no time at all. But there are drawbacks, as there are with all structures. For a clear overview, take a read on how to choose the right business structure, and make an informed decision.
Happy, Open Workplace
If you want to see just how important it is to make sure discrimination has no place in the workplace, take a look at Uber. They had a relaxed attitude towards discrimination, and here’s what happened: they were subject to a sexual harassment lawsuit, more than twenty employees were fired, and the CEO eventually stood down. And this was at one of the biggest companies in the world.
It’s imperative that you have a sound HR structure in place, and stamp out anything that might be considered discrimination at the first opportunity. This isn’t just because of your legal responsibilities; it’s just what a good boss does. Having an office where discrimination isn’t taken seriously will affect your reputation, make for an unhappy workforce, and ultimately lead to a lawsuit that could seriously affect your ability to trade.
It’s your job to have a system in place to ensure that everyone you hire has the legal right to work. You’re permitted – encouraged, even – to ask for the right documentation to prove that the worker is legally able to work. If they present the documents and they appear to you to be genuine, then you’re in the clear; you’ll have done your duty.
However, if an immigration officer finds that you continue to employ them after you knew they were illegal, you would be liable to pay the associated penalties. If you do want to hire a person who isn’t from the United States and who doesn’t have a work visa, there are legal steps you can take to bring them on board, though this can be complicated.
Your determination to grow your company, and to use your employee’s skills to fuel that growth, might be one area where you slip up without realising. There are rules surrounding how many hours an employee can work, and also associated pay rises should they work longer hours. Additionally, each state will have its own laws relating to what the employer is required to provide for their employees. Failing to meet these requirements can have hugely detrimental effects on your business, not just from a legal point of view but also with your employee engagement.
When it comes to employee/employer relations, the United States generally favors the employer, and as such in most cases, you’ll have few problems if you fire an employee. This is because most jobs are ‘at will’, which means there are no contracts involved and underperforming employees can be fired without a second thought (they can also quit without a second thought, too).
However, there are some scenarios where you’d be best consulting a lawyer before letting an employee go. If there is a chance the termination might be related to discrimination, be it because of race, pregnancy, gender identity, and so on, then the employee could sue. You’ll also be in trouble if you fire someone in retaliation for something, such as blowing the whistle on unsafe practices or because they took time off due to an illness.
It’s important to remember that it’s not only business laws that’ll affect your company: how you conduct yourself will also impact your business success. A messy private legal case, especially one in which involves a crime and is played out in the courts, could spell the end of your organisation, not through any legal way but because of the public’s lack of trust in your credibility. Wherever possible, make sure your private legal matters are not subject to public scrutiny.
Outside of your Control
Following on from this idea, it’s also worth thinking about how matters that are outside of your control might affect your business, too. For example, if you have a car accident – one that wasn’t your fault – and are unable to work to your full capacity due to your injuries. There’s a great site for understanding all your options and legal rights after a motor vehicle accident, written by top-rated New Orleans car accident attorney Keith Magness, which outlines what you might expect to receive in such a scenario. This includes loss of earning, which, as a business owner, would be substantial. It’s important to keep in mind that the law is on your side in more ways than one, and can also affect your business in indirect ways.
Providing a poor level of service to your customers will be bad for business, purely because you’ll get terrible reviews and no repeat business. However, this isn’t the only reason you should strive to do your best; if you’re routinely failing to deliver what you’ve promised and have many unhappy customers, then they might group together and a file a class action lawsuit. Aside from costing you a lot of money in legal fees (even if you win), the suit would irreparably damage your reputation, from which it may never recover.
Talking Bad About Rivals
There is a temptation to talk bad about your competitors, especially in the early days of your business when you’re trying to get ahead. However, remember there’s a fine line between poking gentle fun at a rival and libel. Of course, there is the general umbrella of ‘freedom of speech’, but this will only get you so far. Also, don’t think you can use the anonymity of the internet to spread your message, either: people can be – and have – been traced this way, which can heap a lot of embarrassment on a company as well as get them in legal trouble.
Now, you should already know that you shouldn’t be using other people’s intellectual property without consent, but for many companies, this isn’t the problem: the opposite is. If you’re not protecting your own intellectual property, then you’ll be running the risk of another company sweeping in to take it. You’ll have lost a part of your company, and you won’t have a leg to stand on.
A Safe Workplace
We don’t need to tell you that we’re living in a litigious time. It does not take much for a lawsuit to be filed, but some companies are guilty of making it all too easy. If you have premises where you invite customers, you need to make sure that there is no chance of anybody tripping or injuring themselves. While you should have insurance to cover the costs should it happen, it’s a headache that you’ll want to do without altogether.
Failure to Document
There are no such things as handshake agreements when it comes to business. You need to be writing everything down, documenting every aspect of your company – such as your relationships with other companies, customer agreements, website policies, and so on.
Get a Lawyer
It’s impossible for a small business owner to know what parts of the law apply to them, but they don’t have to: they can hire someone else to know that information for them. Look at retaining a lawyer for your company, so they can be hand to review your actions from a legal perspective.
You can’t account for every law, but endeavor to make the law a priority, and you’ll ensure you’re always on the right side.
Six Ways to Protect Your Company in 2019
A new business has enough to worry about without the addition of legal trouble. With how complicated the legal system is, and how many branches of it affect businesses today, it can be a real challenge to stay within the law without inadvertently breaching it.
Not only are there plenty of laws to follow, but they also change. One year you might be well within the legal system, the next you’re breaching it because they have made a change to how you’ve been running your business for the last five, ten, or even twenty years.
Adapting with the times is a sign of a successful business, and to help you improve your company’s adaptability you will want to follow this guide:
1. Have a Legal Team of Experts on Hand
Legal advice is invaluable, which, of course, is why it can be so expensive. For new businesses, small businesses, and those who have a narrow profit margin, this can mean a difficult period can be incredibly difficult to budget for.
A great way to avoid the unexpected legal fees, however, is to subscribe to them. That way you can budget appropriately and have a professional financial lawyer on your side as you need to. If your allocated hours run up, you will then benefit from an 80% discount for extra hours until the next month.
2. Create an Anti-Harassment Policy
Discrimination and harassment laws should never be taken lightly. In the States, discrimination laws usually don’t come into effect until you have more than 15 employees working for you, but this changes from state to state. Assuming is your enemy, so always check up on what you are legally entitled to do and go one step beyond.
3. Get Your Business Model Written Down
You want your company’s business model, including partner agreements, to be written down and formalized. If they aren’t this could spell trouble in the future when your partner tries to take more than his share, but you don’t have a legal document stating he can’t.
4. Get Your Company Trademarked
Another way to protect your company is to get it trademarked. Not every brand name can be, of course, but if you have a unique name it is best to get it trademarked so that there will never be any doubt as to which company a customer is trying to deal with.
5. Get the Necessary Copyright (When Applicable)
On top of trademarking your brand your will also want to apply for patents and copyright when applicable. New products that have a unique or distinctive design can be patented and trademarked and therefore protected from copycats.
6. Keep Your Books in Order
Last but not least, you will always want to keep your accounts in order. Not having this information can make it difficult to acquire tax discounts, but more importantly it can be a huge disadvantage if your company is audited or money goes missing from your account.
By keeping up to date with your finances you better protect yourself and can work on how to budget better.
What Do Trade Secrets Protect?
According to the United States Patent and Trademark Office, a trade secret is “information (that) can include a formula, pattern, compilation, program, device, method, technique or process.”
At first glance, you may think that a trade secret looks very similar to a utility patent, but as you will see, they are very different. For starters, a utility patent is something that is filed and approved through a rigorous process, whereas a trade secret is only granted limited protection in certain cases.
A trade secret aka ‘confidential information’ is non-patented information that provides a company with a competitive advantage in their industry. This could be anything from a marketing strategy to a recipe for award-winning cookies, and at their core, they enable a company to keep an edge on their competition.
As everything comes down to ‘interpretation’, and even lawyers interpret the law in a way that works for their client. Disclaimer: Don’t get caught out in a way your competitors can steal your information. A patent attorney in Orlando recommends always seeking legal advice. Startups are particularly vulnerable to the prying eyes of competitors. The options for protecting your intellectual capital or business trade secret include non-disclosure agreements (NDA), and of course if deemed the appropriate strategy, applying for a patent.
Read more below about what types of protections you are granted in the United States for a trade secret.
What is a Trade Secret?
A trade secret is anything that gives you a competitive edge in your industry, whether it is a process, recipe, or simply a method of doing something. In some cases, trade secrets are eligible for patents; in other cases, a trade secret must simply be protected by ensuring this information is not leaked.
Trade secrets are not protected like a patent – instead, they only protect against unauthorized disclosure. This means that if a contractor were to leak your trade secret to a competitor, you may be able to seek damages from the contractor, royalties from the competitor, and possibly have a court force the competitor to keep the trade secret from leaking further.
However, there is nothing that bars a competitor from independently discovering the same secret. In a patent, your invention is clearly laid out by the USPTO. Since a trade secret is not disclosed in the same nature, you can not take up legal actions against a third party who has come across the same information under their own labors.
How Does a Trade Secret Work?
Since trade secrets include such a wide variety of things, they vary slightly depending on the information in question. One good example of a trade secret is a simple customer pricing list for a sales organization.
If this list were to be leaked to the competition, there is little stopping competitors from simply offering better rates to steal these clients. One way that this list can be handled is through the use of a non-disclosure agreement, otherwise known as an NDA. In the NDA, the company can indicate all information that is not to be released or shared outside of the company, and in many cases, can not be shared within the company either.
If a trade secret is shared or discovered by misappropriation, a court may force the entity to take measures to keep the information from going any further, as well as forcing royalty payments, legal fee reimbursement, and more.
Remember though: if your competition independently discovers the same information as your trade secret, you are not granted any legal protection. If you are concerned about this and believe that your trade secret is truly unique and useful, explore your options for getting it patented in order to enjoy complete protection.
What’s in a Name: How to Choose & Legally Protect Your Business Name
When starting out on a new business, one of the most exciting parts of getting set up is choosing the perfect business name. We want something witty that sticks in people’s minds, and perfectly sums up exactly what it is that we do. Brainstorming the perfect business name can be hard, and it is made harder by the fact that just because we think we have come up with the perfect business name does not mean that we can use it.
Before we start doing anything with our amazing new business name, we need to make sure that we are actually allowed to use it. We don’t want to find ourselves with a great new website and fancy business cards only to have another business come in and stop us from using our new name, and even potentially request damages. We can save ourselves a lot of time and stress by taking the time to properly confirm whether our chosen business name is available for us to use.
Business names are regulated under Trademark Law. Regulations are in place to prevent businesses from using a business name that is likely to lead them to be confused with a competing business. If a business is found to be infringing on the trademark of another business, it can be forced to change its name, which can be a costly setback, and sometimes forced to pay damages.
It is not always prohibited to use a business name that is already in use. If the business that is already using the name is relatively small, and provides drastically different services to you, you may still be able to use the name. The same applies if the business is located a significant distance from where you are and only serves a limited community, which your business is unlikely to serve.
Research your Business Name
Once you have come up with an appropriate business name, there are a number of searches to conduct in order to ensure that it is available to use. While a federal database of registered trademarks exists, it is not sufficient to just search here. Some companies with a local focus will only register their trademark on the state level, and under United States law, a business can lay claim to a trademark by using it, without registration.
As well as searching the federal database of registered trademarks, which includes every trademark registered by the United States Patent and Trademark Office, also do a state level search for your state, and neighbouring states if you think that your business will be active there.
The next place to search is the world wide web. In fact, it is probably worth doing a basic internet search before investing time and effort in trademark searches as most companies have a web presence, so this is a fast way to eliminate names.
As well as searching for companies using your exact name, look out for companies using a similar name that are active in a similar field. If there is too much crossover in your brand and service, these companies may also be able to prevent you from using your selected name under trademark law.
This type of internet search also helps you make sure that your selected business name is available as a domain name for when it comes to establishing your own web presence. Check with different abbreviations and hyphens as well as alternative top-level domains (such as .com or .net). While you may legally be able to use a business name, you may still want to avoid it if another company is already using your preferred web domain, or a very similar domain.
Conduct Business Entity Search
Finally, you need to check if the business name is available in your state.This search has to done on a state level. Each state maintains a database of all corporations, limited liability companies (LLCs) and limited partnerships registered in the state. Each state will also have a fictitious name database, which is a list of all registered business names in the state regardless of whether they have registered a trademark or registered as a corporation with the state. This is the final search that will show up unregistered companies without a web presence.
Register your Trademark
Once you have found a business name that you can use, it is a good idea to think about registering. While it is not legally required to register a trademark to start using it, registering your trademark can be useful if you do ever find that you need to defend your trademark in court. Plus, it may help reduce the risk of others using your name, as it will be easier for them to locate your business when they do their own new business trademark search.
Brexit Unknown Makes UK Businesses Nervous
Brexit is certainly making businesses nervous right now, and there are many reasons for that. Despite almost three years having passed since the original vote, things are no clearer as to what the impact will be on business or what kind of trading relationships the UK will have with the EU going forward. Therefore, some nervousness is to be expected.
UK Businesses Rely on EU Workers
UK businesses of all kinds and in all industries employ EU workers. The question that remains unanswered is how those working relationships will function after Brexit has properly occurred.
There are guarantees in place that workers currently residing in the UK will be able to carry on living here, but it’s not at all clear whether more EU workers will be able to move here with ease after Brexit, and most indications suggest that won’t be the case. This will certainly have a big impact on businesses in many sectors. See this article on: Solicitors talk Brexit.
All Types of Workers Are Required for the UK Economy to Function
One idea that has been floated by the UK government is the idea of an income threshold, meaning only those earning more than a certain amount of money will be allowed to live and work in the UK. This would mean that highly skilled workers would find it much easier to work in the UK than low skilled workers would.
However, the UK economy relies on both skilled and low skill labour in order to function properly. If that supply of low income workers was cut off after Brexit, more businesses would struggle.
Contingency Planning Might Not be Enough for Small Businesses
For big businesses, contingency plans are already being put in place. This is expensive and time-consuming for large companies, but it will mean that they’re able to protect themselves against the upheaval brought about by Brexit. On the other hand, small businesses don’t always have that option because they don’t have the resources to put adequate contingency plans in place. It’s those small businesses, therefore, that are likely to be hit hardest.
It’s clear that small businesses are not opening at the rate they previously were because of Brexit uncertainty too. This denies the UK economy future growth prospects as well as depriving society of potentially successful ideas and businesses.
What Can Business Do to Prepare?
In terms of what businesses should be doing now, it’s best to seek professional legal advice about the situation, what you can expect and where your business and its staff stand. You should also analyse your supply chain and think about how that could change in the future under various Brexit scenarios. It might also be a good idea to look at existing contracts with EU companies and seek clarifications regarding those.
The Brexit situation is constantly in a state of flux, so things can change very quickly in one direction or the other. Therefore, it’s important for businesses to be watching and listening so that they can work out what their next move should be in order to prepare properly and minimise risk.
If You Own A Business, You Need An Estate Plan
It’s an unfortunate fact that arguments over material possessions break out between family members when somebody dies. It’s rough when one beneficiary thinks they’re entitled to that person’s possessions and financial resources more than the others. The complexity of the situation is amplified when the deceased person owned a business.
If you’ve got a family, you have every reason to care about what will happen to your business when you die. Your business has the potential to be an investment for your children or a nest egg for your spouse. If you haven’t created an estate plan that includes your business, it’s time to create one.
Start with a will
Your will is the most basic estate planning document. It allows you to declare who will be named the executor of your business. Your business executor will be responsible for continuing the business.
Dying without a will places a huge burden on your employees, business partners, and the success of your company.
Although a will is important, it’s not everything.
Your will isn’t the principle governing document of your estate
Our USA based readers may be interested in what’s in this article titled: What Might Surprise You About Your Will, CG Trust explains that many assets don’t fall under a will or probate like real estate, life insurance, and mutual funds. When you purchase these assets, you’re asked to assign a beneficiary and sometimes a contingent beneficiary.
When you specify a beneficiary for an asset, that overrides anything stated in general terms in your will. For example, say you leave everythin’ to your aunt Suzie in your will and your children are listed as beneficiaries on your life insurance policy. Your aunt Suzie can’t touch your life insurance policy – only your listed beneficiaries can.
Identify your designated beneficiaries for all business assets. If it’s not somebody you want to inherit that asset, change your beneficiary immediately. Remember, a beneficiary on a specific asset overrides what’s in your will.
Focus on minimizing your taxes
Most people don’t realize that when a business owner passes away, the estate taxes can tank the business. Estate taxes can be more than 50% of the value of your business and must be paid within nine months of your death. Most businesses need to liquidate to pay these taxes.
Thankfully, the IRS has tax breaks in Section 303 and Section 6166 that can protect your business. Section 303 deals with using stock to pay death and funeral taxes; Section 6166 deals with Federal estate taxes.
Both sections make it easier to pay necessary taxes without breaking up your business.
Avoid probate as much as possible
Although the process is mostly clerical, probate ties up assets for months (sometimes years) and can be expensive. It’s best to plan ahead to avoid probate as much as you can.
When you create a properly structured ILIT living trust, the benefits paid from the insurance policy won’t pass through probate. The funds will be available immediately to cover estate taxes and other financial obligations.
You can also establish a grantor retained annuity trust (GRAT). With this trust in place, if your assets grow over the terms of that trust, the appreciation won’t be subject to estate taxes. This allows you to pass your business assets to your kids or your spouse.
Declare power of attorney
You need to declare power of attorney to someone trustworthy to handle legal matters on behalf of the business when you pass away. This individual will be in charge of things like payroll, managing vendor payments, and financial assets.
If you don’t declare power of attorney to someone before you die, the court will appoint a guardian who may not have your company’s best interests in mind.
You also need a succession plan
A succession plan is designed to ensure your business runs as smoothly as possible; it’s a plan that chooses decision makers and creates a strategy for transferring company information to the right people. Although the details for every business will be different, Fidelity.com describes what might be included in this plan.
For example, a management succession plan might include training your successors, delegating responsibilities, and bringing in an outside advisor for their objectivity. An ownership succession plan might include defining who will own vs. manage the business, creating terms that consider your family’s best interests and timing the transfer of your business to avoid a discounted sale of your business.
Get professional guidance
Making sure your business survives and stays in good hands when you die is important. If you’re not sure where to start, contact an estate planning professional for help.
4 Things to Consider When Creating a Business Continuity Plan
One of the biggest mistakes a business owner can make is abiding by the “it will never happen to me” rule in regards to disasters. Each year, thousands of natural disasters occur all over the country.
Acts of nature like wildfires or floods can lead to a business closing for long periods of time. The only way to prevent problems when dealing with disastrous situations is by creating a business continuity plan.
Studies show that nearly 82 percent of the businesses in the United States do not have the IT infrastructure in place to deal with a disastrous act of nature or network outage. Instead of leaving the functionality of your business to chance, now is the time to take continuity planning seriously.
The following are some of the things you should consider when creating a business continuity plan.
1. Work on Identifying the Potential Threats You Face
Before you can create a comprehensive business continuity plan, you need to adequately identify the potential threats your business faces. Having a plan for a variety of possible disasters can help you rebound in a hurry following one of these events. Some business owners only make continuity plans to deal with things like natural disasters, but there are many more disastrous situations to consider.
For instance, figuring out what you would do to keep your business functional in the event of an employee strike or cyber-attack is essential. Once you have a list of possible disaster situations, you need to map out all of their outcomes.
If you are unsure about how to map out these outcomes, working with professionals who are experienced in continuity planning is a must. Often times, these professionals will be able to look at these situations objectively and help you figure out how to create adequate plans for each one.
2. Constructing a Recovery Team is a Must
One of the most vital parts of a successful business continuity plan is creating a recovery team. If you want to keep your own staff freed up during a disaster, hiring a third-party to perform this job is easy. Before hiring a company to fill this role, you need to assess the amount of experience they have.
Not only can a third-party act as your recovery team, they can also help you hone and refine your existing continuity plan. Allowing professionals to get a look at this plan can help you out greatly. They will be able to look at your continuity plan objectively and provide you with guidance on how to improve and strengthen it.
3. Know What is At Stake Without a Continuity Plan
Driving home the importance of a continuity plan is easy if you actually assess what you stand to lose without one. Often times, businesses without a comprehensive continuity plan will lose a lot of money in the event of a disaster.
While some of this money can be recouped via a class action lawsuit, a business may still lose lots of customers in the process. You can learn more about disaster-related lawsuits with a bit of online research.
4. Prioritizing is Vital When Creating One of These Plans
When disaster strikes, you will have to limit the number of resources your team uses. When creating a business continuity plan, it is important to figure out what technology or systems you need up and going first. Having this list of priorities in hand in the event of a disaster can help you limit the amount of downtime your team experiences.
Instead of trying to take on this complicated process alone, you need to reach out to disaster recovery professionals. With their help, you can get a plan in place in a hurry.
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