Whether you’re setting up a startup or your business is well established, you must ensure your business is legally covered. A successful business has proper procedures in place and has safeguarded against any legal concerns that may arise.
This article will explore how legal precautions can protect your business and its financial health, helping you to succeed.
1. Protect Your Intellectual Property
The first area of concern for any business should be protecting intellectual property (IP). This covers everything from the design of your business logo to the products or services you develop. If these aren’t legally covered, you run the risk of other people taking aspects of your business and selling them as their own.
When this occurs, your business will lose income simply because your customers are split. They can choose between shopping with your company or a competitor who owns your IP.
2. Keep Your Company Secrets Intact
Further to ensure that your IP is protected from use by others, you may also have company secrets that need protecting. These can include the development of technology or processes that no other business in your industry uses. If a competitor can get their hands on this information, your competitive edge could disappear and so could your profits.
To protect this information or technology, it’s important to put non-disclosure agreements (NDA) in place. This paperwork will ensure that anyone working for your company or in contact with the sensitive data cannot share the information, or if they do, you can take legal action.
3. Ensure Your Reputation Remains Positive
Legal troubles for a business can do serious damage to its reputation. When you have the proper precautions to cover you in the case of liable action or to prevent IP disputes, you can go a long way toward stopping this kind of damage to your reputation.
We live in a world that has an increasingly short attention span. If your reputation is questioned, you could find customers moving onto a competitor quickly and not returning.
4. Allows Everyone to Know Their Role in the Business
Finally, proper legal precautions ensure that your company operates smoothly and that there is no room for dispute regarding positions and roles within the business. Having a proper structure for your business, with legal documents that define the roles of founders, management, and employees, will ensure all of this.
Legal Steps Your Business Must Take
Now that you can see how decent legal precautions can ensure your company operates smoothly and disputes don’t impact your bottom line, let’s look at the steps to take:
- Set Up Processes for Proper Record Taking
Business documentation is vital for setting a legal paper trail within your company. Everything must be documented—from employee contracts to invoice processing for customers. It’s equally important that all of these documents are properly stored and backed up. This could mean hard copies filed away and digital copies kept on an external hard drive and in the cloud.
When you set up your contracts and your other important documents for your business, take some time to set up a method for recording and storing them too. You want a system that allows for safe storage and easy recall should legal disputes arise.
- Define Clear Ownership Rights of Ideas and Concepts
Going back to intellectual property—this is a big one for legal concerns in a business—you must establish up front who owns what. Suppose you have a designer working on your brand’s logo and corporate identity. In that case, it must be clear that you own the final product and that the designer cannot use the design or anything too similar for another client.
The same applies to getting bespoke software designed for your business operations or manufacturing a particular product or tool. The person, people, or company that creates these items for your business should not hold ownership of the IP. There will be cases where the other party can have part ownership. However, without your consent, this will not give them the right to sell the IP to a third party.
- Solid Employment Agreements
Agreements between your business and your employees are a vital part of operating. They cover both parties’ expectations regarding work, remuneration, and employee well-being. They also help ensure your employees won’t give away trade secrets or company IP.
Having these contracts set up before an employee begins working for your company is important. These documents also need to comply with local labor laws and employment regulations.
- Get the Right Insurance Cover
There are several types of insurance coverage for businesses, and what you need to get will depend on your operation. For example, you’ll need insurance for on-the-job injuries in a construction company that an office-bound business won’t need.
It’s important to ensure you’re covered against customer, supplier, and employee suits. It’s best to talk to an insurance provider about what your options are for your specific business.
- Separate Your Business from Your Personal Life
Finally, if you own a business, you must ensure that your personal life is not legally entangled with the business. You don’t want to end up in a situation where your assets are under threat if your business gets taken to court or falls into financial trouble. The same goes for your business assets getting called into question if something happens in your personal life.
Taking Precautions Will Keep Your Business Safe
Legal precautions are exactly that. Precautions are put in place if something goes wrong. In business, thinking something bad won’t happen to you is never a good idea. Living with your head in the sand can lead to costly legal drama that can cripple your business financially. With the right precautions, the likelihood of this happening is largely mitigated. Understood, lawyers can be expensive. But it is important to at least have a small business lawyer on notice when you are notified of a claim.
