Those are the steps you should go through when starting your business. If you follow them, you’ll start a business that is ready for high-growth. It will be scalable and you’ll have taken the necessary steps to ensure it is sustainable and successful. All you have to do is work the plan.
Still, there are a few key areas that I’d like for you to pay extra special attention to. Those areas are the ones that provide the most protection for your business. They are the legal and financial considerations you should take special care to do right.
This advice does not replace the advice of a trained and licensed legal or financial professional. And the advice I am giving you does not constitute legal or financial advice. It is, however, common best practice. You should discuss all legal (laws and statutes, contracts and agreements, disputes, etc) and financial (tax, accounting, insurance, etc) issues with a lawyer and accountant. If you need help finding one, you can get a free copy of Ultimate Resource List, which can direct you to resources.
Legal and Tax Considerations
The nitty gritty you need to prepare for in your business
Choosing the correct entity type for your business is one of the best ways to protect your business from liability, get the best tax advantages possible, and prepare for outside investment. Whether you incorporate as an LLC, C-Corp, S-Corp, or B-Corp will determine how you get paid, how you recruit advisors and other pertinent business decisions. You should also discuss where it is best for you to incorporate based on your business plan.
Establishing Your Tax Accounts
The government wants their money. They say, “there is nothing more certain than death and taxes.” Make sure that you register with federal, state, and local tax agencies. You should also talk with your CPA about the best way to collect sales taxes (if necessary), how to handle international transactions, withholding the right amount for payroll taxes, filing taxes and completing tax documents, and when/if you should make estimated tax payments throughout the year.
Having employees means having employment-related issues. It comes with the territory, no matter how well-run your business is and how great the culture you build becomes. Why? Because you’re dealing with humans. Having an employment-related lawsuit as a small business can be devastating to your business. Your lawyer can explain to you the various employment laws and help you avoid employment-related pitfalls. They can also be a great resource for handling HR issues, such as hiring, firing, employee document retention policies, harassment policies, etc.
Making sure you stay on the government’s good side is always an advisable thing. Your business advisors can help you with filings and other requests by federal, state, and local government agencies and regulators.
Taxes and Records
Keeping: The best way to pay taxes is to plan how much you need to pay in advance. An accountant can help you develop financial strategies that maximize your profits and minimize your tax liability. They can be a great asset at setting up your books, helping you manage your finances, advising on cutting expenses, and maximizing available deductions. They also will prepare your tax returns.
Lawsuits and Other Legal Action
Even if you write agreements and everyone seems happy, things can happen. Those agreements may need to be enforced and you will need a lawyer to represent your interests. Conversely, someone may want to sue you and your business for any number of reasons, and while you may want to defend your business, it’s often the best course of action to have an attorney speak for the business and handle all the documents. Your lawyer is often the best way to resolve conflicts before they get to court.
Trade Secrets and Other Confidential Information
Just about every business develops trade secrets over the course of the business. Even if they don’t, they do have customer lists, business plans, financial information, and other agreements and data that they want to be protected from competitors and public information. Your lawyer can help you create agreements to protect this information and enforce those agreements when they are breached.
As a business owner, you and your business have a responsibility to protect confidential information, including that of your customers and clients. It is important that you discuss a document retention policy with your lawyer as your business grows. That policy also needs to be shared with employees of your firm to remain compliant with your business jurisdictions laws, and to maintain customer confidence.
It’s important that you discuss your intellectual property with your lawyer and establish the proper protections. You should also have your accountant assess their value and document them in your books.
The plan is for your business to be successful and to grow. That growth will bring changes to your business. Those changes will present new legal and financial challenges to your business. It is important to discuss and prepare for these changes with your lawyer and CPA. They can help you transition more smoothly through these growth spurts and ensure you remain compliant with the various laws and regulations that your business falls under. If you consider any outside investment, a merger, an acquisition, an expansion, a move, changes in ownership, stock sale, extending membership rights, or any other major change, consult your business lawyer and accountant.
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