When you have started up a small business and moving it on the road to success, you might face a number of legal issues that can trip up your smooth flow and cause a severe disruption and despair. These tips can help you avoid any such untoward legal problems and run your business smoothly.
Focus on your legal formation
In the first place, decide on the right entity structure for your business. Remember that the kind of entity your business is can influence your borrowings, how taxes are levied and how you streamline the sale of your business. Right from the beginning, it is always good to form your business as a separate entity that can help protect your personal assets. If this is not done, you will have to bear responsibility to your debts and obligations that your business is likely to incur.
Maintenance of records
Always ensure that the organizational documents are kept in place. Resolutions, business decisions, payroll and taxes, company bookkeeping, compliance with laws, and obtaining and maintaining the necessary licenses and permissions must all be done meticulously to avoid any future complications and issues. Operating agreement, company agreement or stockholder agreement – whichever is applicable in your case must be drafted judiciously to avoid any problems in future and to solve any issues that might happen. Ensure that you keep your personal and business finances separate.
Follow a buy-sell agreement
If your business ownership must change at some point of time, a buy-sell agreement can ensure that the acquisition is facilitated smoothly and your exit out of the business happens in an orderly fashion. In the event of partners splitting up or other situations and difficulties that force the business to be sold, a buy-sell agreement can help avoid any complications and see to that the business’ sale value is kept up despite difficulties.
Investments and securities
A number of small business owners look for outside investors to raise the capital to support their business. In course of time, a number of owners and investors happen to disagree on how to run the business. It is important to choose your investors with enough forethought and exercising a great care. Any management issues or new ownership issues must be updated to the business’ governing documents. Any investments in your company must comply with securities and law disclosures. If the investors have to face any situation of loss, they can sue you for treble damages.
The importance of written contracts
Most entrepreneurs give importance to speed over accuracy in matters of dealing with partners, vendors, and employees. It is never possible to enforce verbal agreements. Contracts must always adequately address the obligation of each party concerned and must clearly explain how some potential issues related to your products or services can be solved.
Taking the assistance of corporate lawyers Calgary with regard to important issues connected to your business can help avoid legal complications and ensure that your operations happen smoothly with the least frictions and issues.