Legal issues to tackle before starting your business

Business legal issues - Chris McGrath, Attorney At Law - McGrath, LLCEntrepreneurship is a dream that must be carried out with a hefty dose of practicality. In the excitement of starting a business, it can be easy to overlook significant legal issues. Often, soon-to-be business owners don’t want to deal with the legal elements inherent in starting and running a business because they seem complex and daunting. But overlooking or ignoring these issues is a mistake.

Business owners should tackle legal issues now, while they can still prevent possible problems in the future. An article on Inc.com provides a helpful, clear list of the legal issues that all business owners (whether just starting out or already running the business) should go over. The highlights are below:

  1. Consider the legal aspects of the business in advance. It’s common to want to launch the business as soon as possible: it’s what you’ve been working toward for months or years. If you jump into business before thinking about your business’s legal aspects, however, you could run into pitfalls and legal problems later. You’ll need to think about your choice of entity (whether a corporation, partnership, limited liability company, etc.), necessary business licenses, contracts, and employment. Plan ahead to minimize future legal problems.
  2. Think with your business’s best interests in mind. According to the article, “fighting and winning a legal battle costs more than avoiding it—not only in money, but also in your time and energy.” This is absolutely true. Litigation, which is sometimes necessary, should be a business decision. Many legal battles fought on principle or to prove a point end up costing more than winning the case is worth. Examine the cost-benefit analysis of litigation before it begins. If at all possible, avoid the problem: it’s cheaper and less time-consuming. 
  3. Have someone familiar with the law in your corner. It’s important to establish a relationship with someone who can help you with legal problems. If or when an emergency happens, you’ll want to be able to call an attorney who knows you and your business for answers. 
  4. Keep your personal finances separate from your business. It can be tempting to use your personal bank account for business transactions: handling two accounts can be inconvenient and time-consuming. But it’s worth it. Mingling your personal and business finances affects your legal liability—something you want to avoid.
  5. Put it on paper. Failing to get agreements in writing is a recipe for litigation down the road. Despite everyone’s best intentions, business relationships can quickly sour, which is why this step is so important. You should have written agreements (operating, employment, partner, etc.) to clarify business relationships and minimize the risk of disputes.
About Chris McGrath

I’m a Carmel, Indiana business attorney providing business counsel, commercial litigation and mediation services based on over 20 years of experience. My firm is founded on a principle of supporting others’ advancement and achievement, and my core values are service, passion, faith & loyalty.Chris McGrath’s Google+ Profile