By Monique Goodyer, an Overdrive contributor
Starting a business can sometimes be as overwhelming as it is exciting due to all the legal considerations you must take into account. You may have your next million-dollar idea but you must consider some legal implications and concerns before you start your business. Here are some important legal issues to consider before kicking off your business:
Your business name could be one of the first legal decisions that you decide on without even knowing it. It’s important to ensure that your nominated name doesn’t already exist. The first step would be to type in your nominated name into Google and see if the business name already exists. If not, check your local business register or online directory.
If you cannot find your nominated name, you should be clear.
It’s critical to determine what business structure you would like to move forward with as each structure comes with different obligations and concerns as well as tax considerations. Common business structures include sole traders, partnerships, corporations or a limited liability company. You must refer to your country’s legislation and rules in regards to each type of business structure to work out which one suits your business’s needs the most.
Any Leases on Premises
A good lease could make all the difference in your business. If your business has a physical premise, you must look into the lease of your premises and if there are any conditions attached. It’s essential that you understand all the terms and conditions of the lease. Look out if your lease specifies if you have an option to renew and any further conditions that may impinge your business in the future. You must also refer to your local retail premises legislation to ensure it is regulated by any statutory protection offered if possible.
Setting up professional indemnity insurance is often overlooked when a business is first set up, as it’s not seen as critical at the time. However, if you’re in a profession that gives advice or provides a service, it’s an important step that should not be delayed as it protects your business if you make an error or omission in your profession. Indemnity Insurance covers the costs and expenses that come with any negligence claims made against you. For example, a consulting engineer with this insurance would be covered if they were held liable for engineering advice that caused injury or loss.
Firms who do not purchase this insurance at the start are exposed to a higher risk in the event of a client dispute as in extreme cases they could lose their personal assets or become bankrupt.
Public Liability Insurance
Another type of insurance cover that should be looked into when you first start a business is public liability insurance. Why? Because as a business owner, you can be held accountable to third parties that encounter your business such as customers, employees, trade managers etc. If damage or accident happens whilst you’re providing a service, they could sue your business – costing you hefty legal fees. For example, if you were a yoga instructor and someone slips on your floor, the victim could potentially sue you. As these incidents may occur at any time, it’s critical to purchase this insurance to cover your business from the beginning.
Privacy and Confidentiality Legislation
Finally, you should be aware of any strict privacy and confidentially legislation that your clients may need to sign to do business with you. With recent legislation tightening the laws surrounding data and the Internet, you will need to look at if any confidentially clauses need to be signed by your clients.
Monique Goodyer works as a marketing specialist at Monaco Compensation Lawyers, one of Australia’s compensation law firms. She’s interested in all things online and the latest trends in social marketing.