Business Law Basics for Entrepreneurs & Small Business Owners
Understanding the basics of business law is crucial for entrepreneurs and small business owners. Compliance with regulations and laws can prevent legal issues that could slow down or even shut down a business. Adam Malone, an experienced medical malpractice lawyer in Atlanta, shares an overview of some key areas of business law that entrepreneurs should be familiar with.
https://www.pexels.com/photo/a-lawyer-behind-his-desk-7876093
Forming a Business
When starting a business, such as a personal injury law firm, founders must choose and legally register an appropriate business structure. Common structures include sole proprietorship, partnership, corporation, limited liability company (LLC), and S corporation. Each has different requirements, protections, tax implications and paperwork. Consult an attorney to determine the best structure based on business goals, number of owners, and liability risks.
Contracts
Contracts are legally binding agreements between two or more parties. All businesses rely on contracts with vendors, employees, landlords, partners, investors and customers. Verbal contracts can be enforceable but written ones provide documentation of terms. Contracts should clearly define services rendered, payment terms, timeline, quality standards, and contingencies – more than 27,000 cases related to contract violations are filed in US courts each year. Have an attorney review any contracts before signing to ensure favorable terms.
Intellectual Property
Intellectual property (IP) refers to creations of the mind like inventions, literary works, symbols, names, images, and designs. IP can be protected through copyrights, trademarks, patents, and trade secrets. It’s critical for businesses to protect their IP like logos, branded designs, unique processes, and innovations. Register trademarks and patents to establish legal ownership. Violating someone else’s IP can lead to lawsuits. In 2023, cases of IP theft rose by 21%.
Employment Law
Employers must comply with employment laws that deal with minimum wage, overtime pay, discrimination, health and safety, family leave, unemployment, and more. Key requirements include poster displays explaining workers’ rights, I-9 employment eligibility forms, employee classifications, meal and rest breaks, and anti-harassment policies. Breaking employment laws can lead to lawsuits, penalties, and criminal charges. Discrimination charges increased by 20% in 2022, with disability cases accounting for 37.2% of them.
Taxes
Business owners are responsible for a variety of federal, state, and local taxes including income, payroll, sales, property, and excise taxes. Maintain detailed records to calculate tax liabilities. File and pay taxes on time to avoid interest, late fees, and penalties. Consider hiring an accountant to manage tax compliance. New businesses may qualify for some tax incentives and deductions.
Insurance
Businesses should have appropriate insurance policies to mitigate risks like property damage, loss from theft, customer injury and professional mistakes. Common types are general liability, professional liability, product liability, commercial property, errors and omissions, cyber, and business interruption. Compare plans from multiple insurance providers.
Privacy & Data Security
Businesses that collect customer data must comply with privacy laws like GDPR and CCPA. In 2023, there were 3,205 reported data breaches in the US, which cost on average $9.44 million. Protect sensitive data with IT security systems. Require employees to follow cyber security protocols. Get customer consent before collecting data. Have systems to securely store data, detect breaches, and destroy records when appropriate. Violations can lead to lawsuits or fines.
Following business laws and regulations may seem complicated for entrepreneurs but can prevent significant problems down the road. Consult lawyers and accountants to ensure full compliance. It provides peace of mind and allows you to focus on growing your business.
