Starting your entrepreneurial journey is an exciting achievement and one to be proud of. However, there are several important legal areas to keep in mind to ensure that your business starts off on the right foot and that you are not subjected to avoidable liabilities. Read on to learn about some of the top areas to remember when starting your business.
*Please note, this list, while expansive, is not exhaustive. In connection with reading this article, be sure to do your own research and ask for help when you need it.
Logo and Business Name Trademarks
Assume that after much brainstorming, you have thought of an amazing idea for your business with an equally amazing business name. Before you can set up your company with a particular name or logo, you must do your due diligence to ensure that you do not infringe upon another business’s trademark. You must also register your trademark at either the national level or EU-level. Most trademarks are region specific and there are no worldwide patents, so to protect your trademark far and wide, consider trademarking in multiple locations or countries. Each place will have its own filing requirements. For example, a non-US citizen filing for a trademark in the United States needs to use a US licensed attorney to do so. Remember that even if you have a registered trademark, enforcement of it often starts with you, so keep an eye out for unauthorised use of your trademark.
Legal entity types
When starting your business, you must decide whether you would rather register as a sole trader or a legal entity. There are pros and cons to each, and the right decision will come down to your business’s unique needs. A sole trader, for example, requires little founding equity to get started, whereas a Limited Company (LC), a type of legal entity, is more expensive to found. LCs are more heavily regulated than sole traders but enjoy higher borrowing power. Sole traders and LCs also have different tax obligations. The main difference between the two is that the sole trader conducts business as a natural person and assumes all liabilities themselves, while the LC is a separate legal entity and offers the business owner the protection of limited liability.
Whether you plan to manufacture your own products or sell the products of others, your business will be subject to or interact with various taxes. One such tax is the Value Added Tax (VAT), which applies broadly to all commercial activity related to producing and distributing goods and services and is added at each part of the supply chain. GST stands for Good and Services Tax and is often used interchangeably with VAT. Remember that regardless of how your business is registered or what you sell, you will have certain tax obligations with which to comply.
As a business owner, you will undoubtedly have important information to protect, even if it is just your customer’s payment information. The General Data Protection Regulation (GDPR) is a powerful protection for EU residents and citizens and places additional requirements on business owners. The GDPR encourages transparent data collection and transmission practices while granting consumers the right to have their data be deleted rather than be stored or used by a company. The fines for violations of the GDPR are hefty, so tread very carefully and take all necessary steps to ensure compliance. The California Consumer Privacy Act (CCPA) is another data protection regulation that protects California residents against impositions into their personal information. The GDPR and CCPA are similar, though the GDPR is much more expansive, covering virtually all business types. This means that as a business owner in an EU country, you will very likely be covered by the GDPR.
Depending on the services or products that your business will make, knowing your copyright rights may be helpful to keep in mind when starting your business. As a general matter, the things you create are protected by copyright, regardless of whether you have created an artistic, literary, scientific, or any other kind of work. In EU companies, copyrights outlive the people who created the copyrighted work by 70 years. Copyrights are a powerful tool for protecting your content, controlling who can sell or license it, and granting you the rights of attribution and integrity. As you start your business, consider whether your content is protectable and take steps to protect it. In the whirlwind of setting up a website and social media, be careful not to infringe on the copyrighted content of others. Even images generated by a simple online search could belong to someone else and cause you a headache if misused.
HR (employment contract and NDAs)
Depending on your new business’s size, you might call on the help of employees. Great workers have the potential to help your business bloom and thrive. Hiring employees also adds additional obligations and legal requirements to keep in mind as you set up your business. Your employees may be covered by some kind of employment contract, including a collective bargaining agreement. As an employer, you must also comply with non-discrimination laws, equitable pay and hiring practices, and proper employee benefits distribution. As an employer, you may have information or trade secrets that you wish to protect from the public. Non-disclosure or confidentiality agreements are a great way to protect sensitive information. Still, some believe that if incorporated too early, NDAs are not as helpful, particularly if you are trying to bring new people, entities, or companies on board. As you start your business, you may want to weigh the pros and cons regarding keeping certain information private versus allowing for the free exchange of ideas and convincing future key players to join your team.
There are other legal areas you need to pay attention to when starting and running your business. Legal services are usually expensive, and it might not seem to be worth it when nothing happens. However, when something does happen it will cost more to remedy the damages and save your business.
Disclaimer The information above is solely for informational purposes and should not be construed as legal advice. You should contact your lawyer for any problems your business may have.