Are you thinking about launching a new business in 2014? If so, you need to set the right legal foundation or risk costly consequences down the road. This applies to the one-person operation, all the way up to large businesses like Facebook.
Here are five legal tips for freelancers and entrepreneurs:
1. Find a legal advisor. The best time to have a business lawyer is when you're just starting out. He or she can advise you on the best entity for your new business that can help save you on taxes and help you manage risk. Developing the right legal relationship now can save you time and money. If you wait until a conflict arises, your options are much more limited about how to handle the situation.
2. Create a legal plan. Having a business legal plan at the outset will answer questions that may cause concern for your company in the future. Address issues like business succession, buy-sell agreements, asset protection and intellectual property protection before they become an issue. Buy-sell agreements are particularly important when you are in business with another person, whether family member or not. Without a buy-sell, your business partner may find themselves in business with your spouse—not necessarily a good thing for anyone involved.
3. Put everything in writing. Entrepreneurs that are lax in executing written agreements with partners, employees, vendors and customers are begging for a business dispute—in which you are unlikely to prevail without a written agreement.
4. Protect everything. If it matters to your business, it is worth protecting with a patent, trademark or copyright. Once you've legally protected your logo and brand, you can use a trademark monitoring service to see if anyone is infringing on your rights.
5. Pay attention to employment law. Federal and state laws govern the employer-employee relationship and you could run afoul of these if you incorrectly, even if unintentionally classify an employee as a contractor. Your legal advisor can help you stay out of trouble with the IRS.
And these tips are a good starting point but not the ending point. Spend time on your business, not just in your business, by reading and staying up-to-date on concerns for business owners.