Mention legal regulations to a businessperson and you will probably see their eyes glaze over. One can hardly blame them given the complexities of the subject. That being said, here are a few legal nuggets you should know.
1. NDA Protection – If you are going to provide important business information to a third party, make sure to get an NDA. An NDA is a non-disclosure agreement.
2. Multiple Business Owners – If multiple people own a business, avoid situations where the ownership interests are equal. If you don’t, you can end up with deadlocks that require court intervention.
3. Written Agreement Jurisdiction – When negotiating a contract, make sure to look at the jurisdiction clause. You want it to be in your town or city. Otherwise, you may have to travel across the country to defend yourself in a lawsuit.
4. Copyright Office Information – All copyrights must be filed with the Copyright Office. It is a department of the Library of Congress.
5. Financing New Businesses – Starting a business usually requires money. Many people make the mistake of first offering ownership interests in exchange for cash. Use this as a last resort.
6. Common Law Copyright – When you create an artistic work such as a book or music, you automatically are granted copyright. If some infringes on your copyright, however, you must have registered it with the Copyright Office to get damages.
7. Avoid General Partnerships – Never form a general partnership unless you have to. This business form leaves all partners open to joint and several liability. This means everyone is entirely responsible for the debts of the business.
8. Business Failure Rates – Roughly 80 percent of businesses fail in the first two years. Plan as much as you can before starting the business to increase your chances of making it.
9. Going Ecommerce? – Most startups don’t think about going online before opening a brick and mortar office or shop. If you can get the hang of web design, it is much cheaper to start online.
10. The First LLC – The first limited liability company came to us from Wyoming. To attract tax revenues, Wyoming passed a law allowing them in the late 70s.
The law is a vast and complex subject. A few tips are not going to get you by. If you find yourself in a complex situation, seek out the advice of a good attorney.
