When running a business, the concept seems relatively straightforward, and in many instances, it can be. However, there are some factors that need to be checked before officially opening a business.
Also, depending on the type of business you run, and the service it offers, there can be many legal requirements that need to be considered, even when it comes to operating as a sole trader or company.
What Type of Structure Will Your Business Use?
To ensue that your business is legally-prepped, the business owners must determine what structure their business will operate on. The structure you choose will influence the type of taxes you have to pay, and what insurance must be in place.
Sole Trader: This can be the simplest form of business, but it does have its limitations. For example, any debts incurred are attributed to the person as opposed to a company. It is also means that the person has to self-finance operations for which they’re not able to obtain credit.
Those who are interested in operating as a sole trader will need to make use of the SBA Locater to find out the legal requirements within their state.
Partnership: As the name would suggest, a partnership consists of two people who will be responsible for the business. Although it may be assumed that no issues will arise with a partnership, this isn’t always the case, so it’s better to be safe than sorry when it comes to the legal aspects.
Both parties should ensure that there is a partnership agreement drawn up that outlines the responsibilities and rights of each partner. It may seem like a lot of legwork initially, but it stops things getting messy further down the line.
Much like a sole trader, and debts are attributed to those running the business. The partnership will also be responsible for locating capital, be it via personal funds or via a business loan.
Company: Unlike a sole trader or partnership, a company is an entity that’s sit separately from its shareholders. In laymen’s terms, this means that the company is recognised as its own entity, as opposed to having a personal attachment as seen with sole traders and partnerships.
The running of a company will generally more income that needs to be dealt with and will often have many employees on board to ensure that the running of the business is a success. As well as contending with the financial demands of the business, business owners will also have to ensure that its payroll is also able to calculate personal taxes of its employees.
Payment of Goods or Services
Depending on whether your business will offer goods or services, you will need to ensure that you have the right legal framework in place to ensure that there is never any difficulty when it comes to payment of an invoice.
Business that offer projects will need to list what will be included for the price the customer is paying, and what should occur should the customer be disatisified. Even the most professional will come across some form of complaint when operating a business. While it can be disheartening, with the right legal safeguards in place, there’s very little reason as to why the situation can’t be resolved amicably, without having a detrimental effect on the business.
A Business Plan Can Aid the Final Decision
Regardless of how simple the concept is for a business, there are many considerations that can be missed if a viable business plan isn’t in place. Not only does a business plan allow you to make amendments for any potential cash shortfalls, it also act as reminder for the direction your business should be taking.
This isn’t to say that amendments can’t be made along the way, but if you have nothing to hand when taking your first steps as an entrepreneur, you could find yourself in some hot water.
Different business plans may need different approaches, but the following are some of the facets you need to look at when preparing yourself for the business world:
- Executive Summary: Gives a snapshot of the business, including its goals.
- Company Description: Explains the outlay of the company what makes it different to others,
- Market Analysis: Will detail competition and recent trends within the industry.
- Marketing and Sales: This section will detail your sales strategies as well as brand marketing should it be applicable.
- Financial Projections: This section is very important, especially if business owners are looking for capital in the guise of a loan or investment.
Should I Consult a Lawyer Before Starting a Business?
The business world is one that consists of many brand and entities, and many have their own way of working. The simple fact is that some will fully-versed about what’s required when it comes to running a business from a legal point-of-view, while others may need a helping-hand.
If you fall in to the latter category, you may be concerned that you will need to invest a small fortune in relation to legal advice, but this really depends on what type of advice you need.
When running a business, it’s better to be prepared legally, then must face the ramifications later on. Regardless of whether it relates to intellectual property, or and accident that has occurred on the premises, your business needs to know where it stands, regardless of the structure being used.
There can be more legal aspects to consider than you think, and although there is a slew of information online, should you be struggling with any concept, it can be advisable to employ the services of a layer that specialises in business. It may seem like an unwarranted cost initially but can be cost-effective when compared to the financial ramifications that could arise.