Legal Considerations for Starting a Small Business

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Transitioning from your side hustle to a full-fledged business is a daunting but exciting time for any entrepreneur. It is a historical moment in which you put all your figurative chips. Transitioning into a business comes with certain legal requirements that you must meet.

Here are some legal considerations for anyone starting a small business in the United States.

Protect Intellectual Property (IP)

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Your brand, name and logo are the lifeblood of your business. As soon as possible, research copyrights, patents, and trademarks. It’s now easier than ever to fall victim to copycats or business phishing, especially if your business is online. Intellectual property protection laws exist at the national and state levels.

Establish written employment policies

Employees are the backbone of any business, but if your business has proprietary techniques that are trade secrets, certain policies must be enacted to protect these techniques during the inevitable employee turnover. To combat this, you should consider implementing non-disclosure agreements (NDAs) and non-compete policies.

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Register under the correct entity structure

The structure of the legal entity that your business is in will determine many aspects of not only its day-to-day existence, but also how the business is taxed and what business loans can be obtained. Take the time to review the different types of business structures, such as sole proprietorships, LLCs, corporations, partnerships, and non-profit organizations, to decide what works best for you.

protect data

In an increasingly digital world, the privacy of your customer and employee data is incredibly important. It is crucial to be honest about the data you are recording and to describe the privacy policies in place to protect that data.

Sensitive information such as email addresses, home addresses, demographics, logins, etc. must be protected. If you’re in the business of selling customer information to other companies (for advertising purposes, etc.), then you need to be upfront about that as well, usually in a terms and conditions statement that the customer will need to sign.

Business Bank Accounts

Having a separate account with business finances other than your own is important not only for keeping track of expenses and income, but it also decreases the risk of personal liability if an audit were to occur.

consult a professional

Business law is complicated and, on the surface, unapproachable. To avoid mistakes or run-ins with the law, a consulting professional will guide you on the right path to avoid potentially costly mistakes.