Running afoul of the law can present a risk in business, especially for people with little or no legal training. The legal work required for even a single-member business can be difficult to undertake and keep current. We all know of a person or a business that has run into trouble because they knowingly or unknowingly violated some law or statute, perhaps even putting the public or their clients at substantial risk in the process. To help avoid some of the most glaring potential pitfalls, we have compiled a quick list of guidelines to follow from the early days of your business.
- Organize properly. Very early in the process of starting a new business you need to prepare and execute the proper organizing documents, as well as file to obtain whatever licenses you need for your particular business. It can be tempting to put these items off, but it is necessary that you do this early and do it correctly. Organizing documents serve to clearly define the relationships of your shareholders, lenders, vendors, managers and employees, while your licenses establish your firm with the proper regulators – essentially defining your relationship with the public you serve. These things need to be properly in order from the first.
- Involve lawyers early, and often. Many people try to handle the legal work of their business themselves, but this is often a very poor choice. Sure, you need to communicate clearly to your attorney what you are trying to accomplish, but you also need to make sure the licenses you get are proper to your business and you have company documents reviewed. The early engagement of a competent attorney will help to fill both of these needs. Sometimes attorneys have a way of drafting common documents, so it can be cheaper for them to prepare your company’s organizing documents rather than reviewing drafts that you have prepared on your own (they may not be familiar with the language you use).
- Submit proper business filings and tax bills on time. Failure to pay taxes is one of the most common ways that businesses run into trouble. Things are running along, often with the business just starting to sustain itself, when the owners get hit with a big tax bill that they did not know they were supposed to pay – often with penalties and interest included for failure to pay the bill on time. In addition to this worry, most businesses also need to submit regular filings for their business including annual reports. The best way to stay on top of these filings and bills – which can plague your business if not submitted on time – is to speak with an attorney or accountant early in the life of your business. They can help to make sure you complete all the necessary filings and pay all requisite taxes.
- Keep things on the up-and-up. Lest we risk stating the obvious, to reduce the risk of encountering legal trouble in your business, it is important to always keep your business dealings strictly above board. Always be transparent, especially with your attorneys and advisors who are there to help you. Avoid shading dealings, or any potential relationship with clients or vendors who have poor reputations. Do not find yourself afflicted by the adage of lying down with dogs and getting up with fleas. Be honest with your customers and your shareholders, and set out with the first intention of helping people and pursuing your vision, with profit coming as a secondary motive. Do not let your vision be corrupted, but look for ways of improving your business while ensuring that your dealings remain proper and professional.
The world of business law can be a complicated place, but it can be easy to stay within the proper bounds by following a few simple guidelines and enlisting the proper advisors for you and your business. While more technical expertise may be sought as necessary, the simple steps above – including the early hiring of strong legal counsel – can help to put your company very early on solid legal ground. From there, responsibility for making sure that the company stays within bounds to avoid running into trouble rests squarely on your very capable shoulders as an owner and manager. Keeping your company above board will allow you to make profits while serving clients in the pursuit of your mission and vision.
Guest Post by Sara Waterson
As a Suffolk native, Sara Waterson came to work at Net Lawman after graduating at the top of her class at the University of Suffolk. She is passionate about law and only seeks to educate her clients to the best of her ability. In her spare time, Sara loves to spend time outdoors with her partner and two dogs. They often go on bike rides around the city.
