Legal Issues in Entrepreneurships

There are several legal issues that can arise when starting a business. Failing to comply with federal and state regulations concerning building codes and how to structure a business could also result in fines. Therefore, it is critical that a new business owner have adequate legal support. The following are areas of business where legal issues could arise:

1. Form of Organization and Business Name-A lawyer can help you determine the form of organization that is best for your business and assist you with the necessary paperwork, whether you're just starting your business or have been in business for a while. In addition to sole proprietorships, corporations and partnerships, most states permit limited liability corporations. The form of organization you choose may affect many aspects of your business, including estate planning, tax planning and liability in litigation. A lawyer can also help you ensure that your business name is preserved for your use only.

2. Buildings and Property- As a small business owner, you need to know the building codes in the district where your business will be operating. This will ensure that there are no building code violations and that there are no structural issues or other problems that may invite fines.

3. Licensing and Insurance-It is important that all relevant and necessary licenses pertinent to the business be obtained. The correct way to apply for any license is through your state’s Business License division. It is strongly recommended that your business be insured (in fact, this is often required), preferably with a reputable insurance company. To receive more information on government regulations pertaining to licenses, permits, registrations etc. for a specific line of business, contact trade associations, business colleagues and experienced consultants.

4. Review of Lease –Small business owners often start their business from leased premises rather than incurring the major capital investment of buying or constructing a new building. However, leases represent one of small business owners’ largest expenses, and generally reflect a long-term commitment. As such, a business owners’ signed lease agreement is a critical legal document. Leases can vary from a simple one-page agreement to a lengthy complex document, depending on the space you are renting (e.g. mall space vs.. separate building). While your realtor can assist you in understanding the costs and basic terms of a lease, it is strongly recommended to have a lawyer explain the legal consequences before you sign any lease.

5. Advertising- There are laws that protect against deceptive advertising and forbid discrimination in advertisements. For example, a product is generally not allowed to be labeled "new" after six months, it is illegal to advertise a "fire sale" when your business did not experience a fire. A lawyer can review any proposed advertising to make sure it is in compliance with applicable laws.

6. Employer/Employee Relations-The management of employees includes hiring, firing, working conditions, sick time, overtime, medical leave, employee benefits, and an employee's privacy rights. An attorney can assist with review and/or drafting of employee contracts and help you in creating employment policies. Legal consultations regarding these policies can make certain that your business is complying with applicable employment laws.

7.Contracts- Many business owners are involved in contracts with employees, customers, suppliers and others. As with commercial leases, a law firm can help you with drafting and/or review of these contracts to be certain that they comply with applicable laws, that they are fair, and that they foresee issues that could be caused by events such as price fluctuations, bankruptcy, war or natural disasters.

8. Fair Trading Practices-Fair trading practices help to avoid deceptive conduct and prevent economic injury to consumers and other businesses. Fair Trade includes unfair competition, false advertising, copyright infringement, etc. As a small business owner, you should make sure to acquaint yourself with the Better Business Bureau guidelines and register your business with them. Registering with the BBB shows that your business has an open-door policy and will be fair and equitable when dealing with complaints or other issues.

It is best to hire an attorney to go through all documentation, plans and papers related to the legal aspects of your business. It also strongly recommended that you consult with an attorney if you have any questions regarding contracts, false advertising, building codes, employee relations and what form of organization best fits your business. This will help you to comply with any legal requirements and ensure that your business is protected from lawsuits and other legal complications.