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16 Important Legal Requirements for Starting a Small Business

Priyanka Prakash

Many or all of the products featured here are from our partners who compensate us. This influences which products we write about and where and how the product appears on a page. However, this does not influence our evaluations. Our opinions are our own. Here is a list of our partners and here's how we make money .

Starting a new business is a challenging pursuit. Part of what makes it so complicated is all the legal implications that come with starting a business. As a business owner, you want to make sure you have covered all your legal bases to avoid any fines, lawsuits, or—worst case—even jail time.

Fortunately, there are plenty of legal resources available to small businesses both online and through hired legal counsel. Use this list as a jumping off point, covering the legal requirements for starting a small business. Checking these off your to-do list will help you ensure that you don't run afoul of any laws. The sooner you take care of these things, the sooner you can focus on what you do best—selling your product or service.

Bizee

16 legal requirements for starting a small business

1. designate the proper business entity..

First things first. Choose the proper business entity or structure for your startup. This is crucial because it affects your personal liability, what you pay in taxes, and your fundraising ability. Possible structures include sole proprietorship, general and limited partnership, C-corporation, S-corporation, and limited liability company. Once you decide which structure is best for your company, you need to officially designate it through your secretary of state.

Most small businesses start out as sole proprietorships or partnerships because these require minimal paperwork and set up time. However, these types of businesses also don't offer sufficient liability protection for business owners. A corporation or LLC is generally a better choice as your business grows, particularly if you're planning to secure a business loan or raise venture capital.

2. Check which licenses, permits, and registrations your business needs.

Depending on your type of business and where it’s located, you might need specific business licenses and permits from your country, state, county, or city. Licenses, permits, and registrations come in many variations. Examples include local business licenses, building permits, health safety-related permits, permits for home-based businesses, fire permits, industry-related permits (like running a legal practice, hospitality, construction, or manufacturing business), liquor licenses, and more.

The possibilities are many, so make sure to do thorough research—perhaps with the help of your counsel—on what you need to be compliant with the law in your area. Your city or county's business licensing agency is also a good place to start.

3. Make sure you are paying proper business taxes.

Every business owner is legally required to pay taxes. This includes income tax, self-employment taxes, and for some businesses, sales tax. It's wise to hire an accountant or tax advisor to make sure you are compliant with all tax laws. Accounting software can also help you figure when to file taxes and what forms you need to fill out.

Most small business owners can't wait until March or April to pay taxes. The IRS has a pay-as-you-go tax schedule for businesses, requiring business owners to pay estimated taxes on a quarterly basis. Make sure you check the IRS requirements for your business type to avoid any fines and back taxes.

4. Do proper bookkeeping.

In most places, you are obligated by law to record all business transactions according to a specific accounting method. See what’s required of you for your industry and location in terms of record-keeping obligations, and set up a proper filing and bookkeeping system for all documents and transactions. This will greatly help you down the line in doing taxes or if you ever run into other legal troubles.

5. Get a founders agreement in writing.

If your business operates with multiple business owners, it’s important to make sure that each person knows and understands their rights and responsibilities in relation to the business. How this comes about depends on your business structure. If you form a corporation, you need a proper shareholder agreement and articles of incorporation. If you form an LLC, you will need articles of organization and an LLC operating agreement. You also need designated legal counsel to make sure the agreements and articles are sound.

6. Set a vesting schedule for all founders and early employees.

This is a practical measure many startups often overlook when they’re just starting out and excited about getting off the ground. But this will protect your business down the line and ensure a certain level of commitment each founder or early employee brings to the table.

Creating a vesting schedule upon incorporation states that stock ownership will vest over time, preventing investors from selling all their stock whenever they please. Note that most investors require this measure before they'll make any initial investments.

7. Get your employer identification number (EIN).

In order to open a corporate bank account and to properly file your business tax returns, many businesses need an employer identification number (EIN). You can easily request one for free from the IRS over the phone or by using an online application on the IRS website. Only sole proprietorships and single-member LLCs with no employees are exempt from this requirement.

You need the social security number of the person completing the form for the company (usually the president or CEO). Include information on your business entity and date of incorporation. Make sure to keep a signed copy of this application in your files.

8. Protect your intellectual property (IP).

Intellectual property is the bread and butter of many businesses. IP includes patents, copyrights, trademarks, and trade secrets as well. Be sure to file any patents as soon as possible—a process that can take more than five years. Protecting your intellectual property will be attractive to investors—but it will also help you sleep easier at night. Having exclusive rights to reproduce and display your work will make your life much, much easier down the line and ensure that no one tries to rip any IP rugs out from under you.

IP can be vastly complicated from a legal standpoint, so it might be wise to consult an experienced IP attorney who can help you through the process and provide you the greatest protection.

9. Classify your workers properly.

Many startups often misclassify their early employees. It’s important to know what kind of worker you’re hiring—essentially, the difference between an independent contractor vs. employee. This is important for tax reasons for both you and the employee and will help clarify what is and isn’t expected from you and the employee. If you misclassify an employee as an independent contractor, you could be on the hook for costly penalties and back wages.

10. Purchase workers' compensation insurance.

In all states but Texas, most businesses with employees are legally required to purchase workers' compensation insurance . Coverage should begin from the very first day your employee starts working. This insurance covers medical and legal costs associated with work-related employee injuries and illnesses. State laws about workers' compensation vary, so make sure you check your state's rules.

11. Make sure you’re in compliance with securities laws.

Founders and investors of LLCs, C-corporations, and partnerships are subject to federal and state securities laws. These laws were made to require companies to provide reliable and accurate information about their businesses to enable a fair market. They also protect from insider trading and trading fraud.

Failure to comply with these laws can result in the startup having to repurchase all of its shares at the issuance price, even if the company has lost all of its money.

12. Follow email regulations.

Email marketing is a huge part of many businesses. When you send emails to your customers or when you are targeting potential customers via email campaigns, you need to find out what the applicable email regulations are. Note that each country has its own set of rules.

Aspects covered by these rules generally include opt-in versus opt-out, B2B or B2C emails, unsubscribe rules, and minimum information to be included in your emails.

13. Make sure your investors are accredited.

The current definition of an accredited investor under the Securities and Exchange Commission rules includes eight categories of investors, but the most general investor accreditation means that the person:

Has at least $1 million in the bank

Has at least $200,000 in annual income

Understands and is willing to take the investment risk

The SEC has guidelines for what constitutes “reasonable efforts” on these accounts. It’s possible to raise funds outside the narrow limitation of accredited investors, but it will open up a Pandora’s box in terms of securities and compliance enforcement. So, if you want to be the most legally sound you can possibly be, go through accredited investors.

14. Establish a privacy policy.

A privacy policy is a legal statement that specifies what a business does with the personal data collected from users or customers, along with how the data is processed and why. Violation of privacy laws can lead to criminal liability—depending on your state, this can mean hefty fines—so it’s important that startups have proper privacy policies in place and carefully adhere to them. The Small Business Administration has a great guide for establishing an appropriate privacy policy for your business.

15. Create a company handbook.

Once you have all the legal headaches sorted out and sounded, make sure everyone in the company is aware and understands your company’s legal liabilities just as well as you do—as a business owner, you could be liable for anything your employees do while representing your organization.

Company or employee handbooks are a great way to instill the values and legal boundaries of your company. It can also help to establish what is and isn’t appropriate behavior internally and externally. Have your legal counsel look this over well or even help you write it, and then get the company together to go over the material.

16. Hire competent legal counsel.

In case this hasn’t been clear throughout, work with lawyers on these complicated legal issues from the start. Startups are often so concerned about expenses that they overlook the importance of sound legal advice that could save them thousands, if not millions, down the line. You really can’t put a price on having the right attorneys on your side.

Ideally, you’ll hire an experienced business attorney on employment law, contract law, securities law, and intellectual property law. You could hire a “general counsel” on your staff at some point, but it’s common for the work to be spread out between different firms and attorneys. The cost is worth avoiding any legal trouble.

The bottom line

Starting a business is hard—don’t let anyone tell you otherwise. But if you are meticulous about getting your startup legal checklist in order, you’ll save yourself from some serious headaches down the line. Some of these items are things you can take care of yourself. But for more complicated tasks, or if you run into questions, it's important to hire a competent attorney to help you.

This article originally appeared on JustBusiness, a subsidiary of NerdWallet.

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The Basic Legal Aspects of an Effective Business Plan

business plan legal considerations

As we enter the final month of the year and excitement grows for the holiday season many people may not realize December also holds a special designation for business owners and aspiring entrepreneurs. It is National Write a Business Plan Month . And while the holidays often serve as a time for reflection on the year that was, developing a business plan forces business owners to look forward and put constructive thought into the years ahead.

No matter what stage a business is at, it is always beneficial to develop and strengthen a strategic plan. A well-drafted business plan serves as a strong foundation for a successful business. The plan acts as a road map directing what the business will do, how it will grow, the markets its will serve, the manner in which it will operate, the struggles it may encounter and the goals it hopes to achieve. Similar to a road map, your business may encounter roadblocks and detours requiring you to rethink the plan’s path, but ultimately an effective business plan will force the owner to think critically and objectively about the future of the business and should continuously serve as a compass for the company going forward.

Along with addressing overarching business matters, the development of the business plan presents a great opportunity to address certain legal matters that may seem minor today but can prevent major stress down the road.

One of the biggest decisions a business faces at the outset is determining how it will be structured. The chosen structure will have lasting implications related to business operations, liability protections, and tax strategies. The most common business structures are limited liability companies, corporations, and partnerships. The entity you chose will likely require state filing and may necessitate obtaining a tax identification number from the IRS and State Department of Revenue.

In addition to determining business entity type, an effective business plan must consider all applicable federal, state and local laws that may be applicable to its operations for each location it intends to conduct business. These considerations keep the business ahead of the curve when it comes to obtaining necessary licenses or permits to operate. The business must also consider local zoning ordinances for each physical location from which it will operate in order to ensure the location is suitable for the operation. Effective planning in these areas helps avoid future hurdles that could delay expansion into a new market and hinder growth.

Finally, the business should consider contracts and legal agreements that may be necessary in its operations. While many of these documents will develop over time and need not be specifically addressed in the business plan, they should be given some forethought as the business considers its operations. Specific contracts that may require particular attention in the business plan are Confidentiality and Non-Disclosure Agreements. These documents are not absolutely necessary in every business venture, but in the right circumstances they can be crucial to the development or growth of the business. By entering into Confidentiality and Non-Disclosure Agreements the business owner will be able to talk freely about the innovative ideas and creative potential of the business without concern that the information will be stolen or publicly disclosed. The more sensitive the information the higher the likelihood the business will require strong Confidentiality and Non-Disclosure agreements.

Ultimately, these are just a few of the issues a business owner must address and there are many other matters that should be taken into consideration when developing a strategic plan. A business owner need not develop the plan alone. They may consult with experts in tax, law, and business as well as trusted individuals invested emotionally or financially in their success. While the business plan will not address every detail that may impact the company, it should plot the road the business will follow. Establishing an effective plan for the business will pave a way that leads to success down the road.

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Understanding the Legal Considerations in Business: A Comprehensive Guide

Understanding the Legal Considerations in Business: A Comprehensive Guide

Welcome to the world of business and law! In this comprehensive guide, we will delve into the essential legal considerations that every business owner should be familiar with. From the formation of a business entity to intellectual property protection, understanding the legal landscape is crucial for ensuring the success and longevity of your business. So, let’s get started and explore the key legal concepts that you need to know.

Understanding Legal Considerations for Businesses: Key Points to Keep in Mind

📋 Content in this article

Introduction: Starting a business involves more than just having a great idea and a passion for what you do. It also requires a solid understanding of the legal considerations that come along with running a business. In this comprehensive guide, we will explore key points to keep in mind when it comes to understanding the legal landscape for businesses.

1. Choosing the Right Business Structure: Choosing the right business structure is crucial as it determines the legal and financial responsibilities you will have as a business owner. The most common business structures include sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each structure has its own advantages and disadvantages in terms of taxes, liability, and management.

2. Registering Your Business: Once you have decided on a business structure, you will need to register your business with the appropriate government authorities . This typically involves registering your business name, obtaining an employer identification number (EIN), and obtaining any necessary licenses or permits required for your specific industry.

3. Contracts and Agreements: Contracts are an essential part of running a business. Having well-drafted contracts and agreements in place can help protect your interests and ensure that both parties understand their rights and obligations. Common types of contracts include employment agreements, partnership agreements, and customer or client contracts.

4. Intellectual Property Protection: Intellectual property refers to creations of the mind, such as inventions, designs, names, logos, and artistic works. Protecting your intellectual property is important to prevent others from using or copying your creations without permission. This can be done through trademarks, copyrights, and patents.

5. Employment Laws: As a business owner, it is important to understand employment laws to ensure compliance and avoid legal issues. These laws govern various aspects of the employer-employee relationship, including minimum wage requirements, overtime rules, discrimination and harassment laws, and employee benefits.

6. Tax Obligations: Businesses have various tax obligations that must be fulfilled. This includes paying taxes on your business income , payroll taxes, and sales taxes, among others. It is important to keep accurate records, file the necessary tax forms, and understand your tax obligations to avoid penalties or legal issues.

7. Compliance with Regulations: Depending on your industry and the nature of your business, you may be subject to specific regulations and compliance requirements. This can include industry-specific regulations such as food safety regulations for restaurants or environmental regulations for manufacturing businesses. Staying informed and compliant with these regulations is essential.

Understanding the Legal Considerations for Finance: A Key Component for Business Success

Introduction:

When it comes to running a successful business, understanding the legal considerations for finance plays a crucial role. Finance is the lifeblood of any organization, and having a solid grasp of the legal aspects related to financial matters can make or break a business. In this guide, we will explore the key concepts and considerations that every business owner should be aware of when it comes to finance and the law.

1. Compliance with Financial Regulations: – The finance industry is heavily regulated, and businesses need to be aware of and comply with various financial regulations imposed by federal and state authorities. – Some important financial regulations include the Securities Act of 1933, the Securities Exchange Act of 1934, and the Dodd-Frank Wall Street Reform and Consumer Protection Act. – Non-compliance with these regulations can lead to severe penalties, fines, and even criminal charges. It is crucial for businesses to understand and adhere to these regulations.

2. Contractual Agreements: – Financial transactions often involve contractual agreements between parties. These agreements outline the rights and obligations of each party involved. – It is essential for businesses to carefully review and negotiate these agreements to ensure that their interests are protected. – Key financial agreements may include loan agreements, financing agreements, lease agreements, and investment contracts.

3. Intellectual Property Rights: – Intellectual property (IP) plays a significant role in finance-related matters, especially in industries such as technology, entertainment, and pharmaceuticals. – Businesses need to protect their IP assets, such as patents, trademarks, copyrights, and trade secrets. – Properly securing and enforcing intellectual property rights can provide a competitive advantage in the market and safeguard a company’s financial interests.

4. Taxation Considerations: – Finance and taxation go hand in hand. Businesses must understand their tax obligations and ensure compliance with federal, state, and local tax laws. – Tax planning, deductions, and credits can significantly impact a company’s financial health. Seeking advice from tax professionals is highly recommended. – Failure to comply with tax laws can result in audits, penalties, and reputational damage.

5. Securities Law: – If a business is involved in raising capital through the sale of securities, it must comply with securities laws and regulations. – Securities laws ensure that investors receive adequate information to make informed investment decisions and protect against fraudulent practices. – Understanding the legal requirements related to securities offerings, such as registration statements and exemptions, is crucial to avoid legal complications.

Key Factors to Consider in Selecting a Business Legal Structure

When starting a business, one of the most important decisions you will need to make is selecting the right legal structure. Your choice of legal structure will have far-reaching implications on various aspects of your business, including liability protection, taxation, and management flexibility. To help you make an informed decision, here are some key factors to consider:

1. Liability Protection: One of the primary reasons for establishing a legal structure is to protect your personal assets from business liabilities. Some structures, such as corporations and limited liability companies (LLCs), offer limited liability protection, meaning that your personal assets are generally shielded from business debts and legal judgments.

2. Taxation: The different legal structures have varying tax implications. For example, sole proprietorships and partnerships are typically subject to pass-through taxation, where business profits and losses are reported on the owners’ personal tax returns. On the other hand, corporations may be subject to double taxation, where both the business entity and its shareholders are taxed on corporate earnings. It is essential to consider the tax consequences associated with each structure and choose one that aligns with your business goals and financial situation.

3. Flexibility and Control: Consider how much flexibility and control you want to retain over your business operations. Some legal structures, such as sole proprietorships and partnerships, provide more autonomy but offer less protection. Conversely, corporations may require more formalities and administrative tasks but offer greater flexibility in terms of ownership transfer and raising capital.

4. Management Structure: Think about how you want to manage your business. Sole proprietorships and partnerships allow for easier decision-making since there are fewer formalities. However, if you plan to have multiple owners or a complex management structure, a corporation or an LLC may be a better fit.

5. Raising Capital: If your business requires external funding, certain legal structures may be more attractive to potential investors or lenders. For example, corporations can issue different classes of stock and may find it easier to attract investors. Additionally, some legal structures may allow for greater access to financing options, such as loans or lines of credit.

6. Future Growth and Expansion: Consider your long-term plans for the business. If you envision rapid growth or potential mergers/acquisitions, a legal structure that accommodates these changes, such as a corporation, may be more suitable.

Before making a decision, it is crucial to consult with a qualified attorney or tax professional who can assess your specific circumstances and provide personalized guidance. Remember that the choice of legal structure is not set in stone and can be changed as your business evolves.

By carefully considering these key factors, you can select a legal structure that best suits your business needs and goals.

As a seasoned attorney in the United States, I understand the importance of staying up-to-date on legal considerations in the business world. The landscape of business law is constantly evolving, with new regulations and precedents being established regularly. It is crucial for individuals and businesses to have a comprehensive understanding of these legal considerations in order to protect their interests and ensure compliance with the law.

A comprehensive guide on understanding legal considerations in business can be an invaluable resource for entrepreneurs, small business owners, and professionals alike. This guide should cover a wide range of topics, including contract law, intellectual property rights, employment law, tax obligations, and regulatory compliance.

Contract law is a fundamental aspect of conducting business. It governs the agreements and obligations between parties involved in a transaction. Understanding the basics of contract formation, terms and conditions, and potential remedies for breach of contract is essential for ensuring that business agreements are enforceable and protect the interests of all parties involved.

Intellectual property rights are another crucial legal consideration for businesses. These rights protect original creations such as inventions, designs, trademarks, and copyrighted works. Understanding how to protect and enforce intellectual property rights can give businesses a competitive edge and prevent others from infringing upon their innovations.

Employment law is a complex area that governs the relationship between employers and employees. It covers areas such as hiring practices, wage and hour laws, workplace safety, discrimination and harassment prevention, and employee benefits. Staying informed about employment laws can help businesses create a fair and compliant work environment while avoiding costly legal disputes.

Tax obligations are an unavoidable aspect of running a business. It is essential to understand the tax obligations and responsibilities that come with operating a business, including income taxes, sales taxes, payroll taxes, and any applicable tax deductions or credits. Failing to meet these obligations can result in penalties and potential legal consequences.

Regulatory compliance refers to the adherence to laws, regulations, and industry standards that apply to specific industries or business activities. These regulations can vary depending on the sector, and failure to comply with them can lead to fines, legal actions, and damage to a company’s reputation. Staying informed about the regulatory landscape in your industry is crucial for avoiding legal pitfalls and ensuring the long-term success of your business.

While a comprehensive guide on legal considerations in business can provide a wealth of information, it is important to remember that laws can vary by jurisdiction and change over time. Therefore, it is always advisable to verify and contrast the content of any guide with current laws and consult with legal professionals for specific advice tailored to your unique situation.

In conclusion, understanding the legal considerations in business is vital for individuals and businesses looking to protect their interests and maintain legal compliance. By staying up-to-date on contract law, intellectual property rights, employment law, tax obligations, and regulatory compliance, individuals and businesses can navigate the complex legal landscape with confidence. Remember to verify and contrast the information provided in guides or articles with current laws and seek professional advice when needed.

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7 Legal Considerations to Prioritize When Starting a Business

Staff Writer

Nothing can be more exciting than the thought of opening your own business. But you have to go through numerous processes when starting your own company, so much so that your excitement can easily dissipate just thinking about them.

Top lawyers say that learning about and dealing with the legal issues that come with starting your venture first can help you go through these processes correctly and efficiently. You will also reduce the likelihood of making costly and time-consuming mistakes that can delay or negatively affect your plans of opening your business.

The Legal Aspects of Opening a Business

When starting your own business , there are a number of legal requirements that you have to satisfy or adhere to. The most important ones are:

1 - The legal structure of your business

One of the many important decisions you have to make when starting a business is to decide on the legal status or structure of your company. Your chosen legal structure will affect how you run your business. It will also have implications on how you pay your taxes and keep your accounts.

The most widely used business legal structures are: ● Limited partnership ● Sole proprietorship ● Limited Liability Company (LLC) ● Corporation ● S-corporation To decide on which status is best for your new business, consider all liability issues that may be associated with your company. Think about which type of tax structure will be best for your business as well.

2 - Trademark

Before selecting your business’s official name, perform a meticulous search online first. Find out if there is another business operating under the name you’ve come up with for your new venture. Do this to avoid infringing upon another company’s trademark and getting caught up in a trademark opposition action .

Once you’ve selected your official company name, consider registering your trading name and logo (if you already have one) as a trademark. This will prevent others from registering their company under the same name.

3 - Licenses

You will need several types of licenses or permits before you open your business. The number of licenses your business will require will depend on the kind of establishment you want it to be. At the very least, you will need a business license, trading license, and sales tax permit.

If you plan to open a restaurant, pub, or catering company, you will have to register with the local governing body for food standards and health and safety oversight. If you plan to provide entertainment in your establishment, you will also need to get the relevant permits for music and entertainment.

It is best to do some additional research and contact relevant local government agencies to learn more about the specific licenses you will need to legally run your business.

4 - Zoning laws

If you are still looking for a good location for your shop, establishment or office, you have to make sure that the area you are eyeing is properly zoned for the type of business you plan to operate. Again, do some research or ask local government bodies to be certain that you can open your business in that area.

Do not make the costly mistake of assuming that your zoning is appropriate just because your business is similar to the ones already located there. There will be instances wherein zoning may have changed while the other businesses were already operating, and these companies may have been given exemptions that won't be provided to new establishments such as yours.

5 - Relevant health and safety laws

As a business owner, you will have to assume several important health and safety responsibilities. These include ensuring that your employees work in a safe, healthy environment.

You also have the duty to look after the well-being of anyone including clients and visitors inside, outside, and near your business premises.

It is highly recommended that you carry out a risk assessment to help identify the risks posed to individuals by your business activities. You then have to mitigate these risks or hazards as much as possible. This may include changing some standard operating procedures and removing some fixtures to ensure that employees and members of the public are safe.

6 - Insurance

Most business zones require all businesses that employ a number of workers to get employer's liability insurance. But aside from being a legal requirement, when you have sufficient coverage, you will avoid incurring fines every day that you are uninsured. You also avoid leaving yourself vulnerable to compensation claims from employees and visitors who may get injured or sick while they are in your premises.

Aside from an employer’s liability insurance, you may want to consider investing in public liability or professional indemnity as well. These types of coverage will help protect your business from compensation claims if something goes awry.

7 - Confidentiality and Non-Disclosure Agreements

Lastly, if you will be working with a bank or other partners for business financing or entering into contracts with suppliers, make sure you have the right confidentiality and non-disclosure agreements.

These parties will have access to business information that you may want to keep private and, as such, you should consider preparing these contracts. Make sure your partners and suppliers sign them as well.

Knowing which laws apply to your new business is something that is also important if you want to open a company overseas. If you want to expand globally, make it a priority to consult a trusted corporate law firm to guide you every legal step of the way.

Our guest author Al Tamimi is senior partner at law firm Al Tamimi & Company.

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business plan legal considerations

1. 2024 Lifetime Estate and Gift Tax Exemption and Looming Sunset

In 2024, the Internal Revenue Service (IRS) increased the lifetime estate and gift tax exemption to $13.61 million per individual ($27.22 million per married couple). Clients who maximized their previous exemption ($12.91 million per individual in 2022), can now make additional gifts of up to $700,000 ($1.4 million per married couple) in 2024. Clients who have not used all (or any) of their exemption to date should be particularly motivated to make lifetime gifts because, under current law, the lifetime exemption is scheduled to sunset.

Since the 2017 Tax Cuts and Jobs Act, the lifetime exemption has been indexed for inflation each year. Understandably, clients have grown accustomed to the steady and predicable increase in their exemption. However, absent congressional action, when the exemption lapses, the lifetime estate and gift tax exemption will be cut in half to approximately $7 million per individual ($14 million per married couple) at the start of 2026.

To ensure that no exemption is forfeited, clients should reach out to their estate planning and financial advisors to ensure they have taken full advantage of their lifetime exemption. Once the exemption decreases at the start of 2026, unused exemption will be lost. Indeed, this is a use-it-or-lose-it situation.

2. Ethical and Practical Use of AI in Estate Planning

The wave of innovative and exciting artificial intelligence (AI) tools has taken the legal community by storm. While AI opens possibilities for all lawyers, advisors in the estate planning and family office space should carefully consider whether, and when, to integrate AI into their practice.

Estate planning is a human-centered field. To effectively serve clients, advisors develop relationships over time, provide secure and discrete services, and make recommendations based on experience, compassion, and intuition.

Increasingly, AI tools have emerged that are marketed towards estate planning and family office professionals. These tools can (1) assist planners with summarizing complex estate planning documents and asset compilations, (2) generate initial drafts of standard estate planning documents, and (3) translate legal jargon into client-friendly language. Though much of the technology is in the initial stages, the possibilities are exciting.

While estate planning and family office professionals should remain optimistic and open about the emerging AI technology, the following recommendations should be top of mind:

  • First , advisors must scrutinize the data privacy policies of all AI tools. Advisors should be careful and cautious when engaging with any AI program that requires the input of sensitive or confidential documents to protect the privacy of your clients.
  • Next , advisors should stay up to date on the statutory and case law developments, as the legal industry is still developing its stance on AI.
  • Finally , advisors should honor and prioritize the personal and human nature of estate planning and family advising. Over-automating one’s practice can come at the expense of building strong client relationships.

3. The Corporate Transparency Act: What Private Clients Should Know

As of January 1, 2024, the Corporate Transparency Act (CTA) requires limited liability companies and other entities (including corporations and limited partnerships) and their beneficial owners to file Beneficial Ownership Information with the US Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).

Importantly, Beneficial Ownership Information  will   not  be publicly available. The CTA imposes strict confidentiality and access restrictions on data that is reported. As such, the information is not subject to Freedom of Information Act requests and will not be published on any database. This differs, for example, from many state-specific corporate reporting requirements.

The reporting period for the Beneficial Ownership Information will be gradually reduced. Entities that were in existence prior to January 1, 2024, have one year to file their Beneficial Ownership Information (until January 1, 2025). Entities created on or after January 1, 2024, will have 90 days after formation to file. Beginning January 1, 2025, new entities will only have 30 days after formation to file. Importantly, Beneficial Ownership Information reporting is not an annual requirement. Information need only be reported once. If the Beneficial Ownership Information of the entity changes, the entity must file an updated report.

Clients should review the  FinCEN website  to learn more information.

4. Simplifying Trust Structures for Family Offices

Many private companies and their owners inherit complex trust structures. These structures are often built up over multiple decades, by different individuals, for different reasons. In some instances, the structures are a necessary byproduct of tricky family assets and needs. In other cases, the structure is based on outdated law or inattention.

In either case, to maintain an efficient and effective family office, clients should take steps to understand and summarize the critical terms of existing trusts.

In addition, family offices should continue to take advantage of modern techniques that can be used to modify irrevocable trusts in ways that were not previously possible. These techniques include trust decanting, nonjudicial settlement agreements, trust protectors, and exercises of powers of appointment. Used correctly and carefully, these techniques can greatly streamline existing estate plans.

For an engaging and in-depth discussion of how to understand and simplify trust structures, we invite you to attend Family Office 101, Part 4 –  Simplifying Trust Structures for Family Offices: Why, When, and How  on Thursday, March 14, 2024, 4:00 – 5:00 p.m. CT.

5. Buyer-Favorable Shifts in the Private Company M&A Market

Coming out of a mergers and acquisitions (M&A) slump in 2023, pent-up demand for deals and increased access to capital in light of predicted lower interest rates forecast higher deal volume in the private company M&A market in 2024.

In evaluating potential M&A transactions, private companies (buyers particularly) should consider deal trends, and seek to build on market momentum, from late 2023 to achieve more favorable deal terms in 2024.

Cash deals have been on the rise since mid-year 2023, especially with financial buyers, with robust due diligence processes leading to special escrow provisions in place of holdbacks. In particular, companies should expect more M&A transactions to include separate tax escrows and stand-alone indemnification provisions for tax matters. Meanwhile, fewer transactions are requiring buyer-paid termination fees, instead requiring seller-paid termination fees or two-way termination fees.

6. Use of Earnouts in Private M&A

Earnouts are becoming an increasingly dominant factor in the private company M&A market. Corporate M&A in 2023 was at its lowest in a decade, with increased financing costs and rising stock-market valuations widening the gap between what buyers were willing to pay and what sellers thought they were worth. In an effort to bridge that gap, companies increasingly agreed to incorporate earnouts in their deals.

Earnouts reduce the amount of the purchase price that buyers pay at closing to protect buyers against the risk of overpayment if the target business does not perform as well as planned after closing. To protect sellers, purchase agreements typically include requirements that buyers support sellers in achieving the earnout milestones.

Private companies should be mindful of the risks associated with earnouts. Legal action can arise in the event the target business misses earnout milestones. From a business standpoint, the isolation of the target business from the rest of the company (for purposes of measuring progress against earnout requirements) can delay a buyer’s business strategy.

7. AI and Inadvertent Disclosures

AI technologies can benefit private companies by helping improve efficiency in financial operations, reducing costs by automating tasks such as data entry, invoicing, and expense-tracking, and enhancing customer experience. Furthermore, AI can help a private company meet environmental, social, and governance (ESG) goals by employing process improvement principles to optimize resource allocation and ensure accuracy, compliance, and improved decision-making.

Along with the benefits, AI can carry significant risks that private company boards and shareholders need to consider before implementing AI technologies. Different tools have different policies regarding saving data; while some AI tools guarantee that data entered in the tool is deleted or anonymized, others store such data, risking inadvertent disclosure of trade secrets and other confidential information if not properly protected. Other potential risks have been discovered relating to copyrighted content and accuracy of information — AI tools fabricate facts or cite nonexistent sources.

Private companies need to have a clear policy and strategy regarding AI adoption to enjoy the benefits while mitigating the risks. They should set clear goals, be aware of potential biases in AI algorithms, and ensure responsible use of AI.

For more information, check out our recent  client alert  on AI and inadvertent disclosures.

8. Class Action Lawsuits under the California Labor Code

Class and representative actions under the California Labor Code continue to cause problems for California companies. Claims for delayed payment of wages, unpaid overtime and minimum wages, unreimbursed business expenses, and failure to provide meal and rest periods have been brought as class actions representing all employees in California. Companies should take preventive measures to evade the resulting pressure to settle even the least meritorious claims. Options include instituting employee arbitration programs and conducting wage and hour audits.

9. Changes Under SECURE 2.0 for Employers Establishing a New 401(k) Plan

The SECURE 2.0 Act of 2022, enacted on December 29, 2022, as part of the Consolidated Appropriations Act of 2023, introduced over 90 provisions impacting retirement plans, including company-sponsored 401(k) plans. One significant change will impact not only the structure of companies’ 401(k) plans but also decisions companies will make in the M&A context with respect to 401(k) plan structure post-closing.

Subject to certain limited exceptions for new businesses and small employers, new 401(k) plans must include certain features designed to help employees save for retirement. Starting with the first plan year that begins after December 31, 2024, a 401(k) plan established on or after December 29, 2022, must:

  • automatically enroll eligible employees at a minimum 401(k) contribution rate of 3% and automatically increase their contribution rate by 1% each year (up to a minimum contribution rate of 10% and a maximum contribution rate of 15%);
  • provide “qualified default investment alternatives” (QDIAs) as the default investment fund for 401(k) contributions made by employees who make any investment election for those contributions; and
  • allow employees who do not wish to be automatically enrolled the opportunity to remove automatic 401(k) contributions within 90 days following the first automatic contribution (collectively, Autoenrollment Requirements).

Although 401(k) plans established prior to December 29, 2022, are not required to comply with the Autoenrollment Requirements, based on guidance released by the IRS earlier this year, an exempt 401(k) plan could lose the exemption in certain scenarios. The IRS has confirmed that if an exempt 401(k) plan and a new 401(k) plan are merged, the continuing plan must comply with the Autoenrollment Requirements.

However, the IRS also has provided a special transition rule in the M&A context. Buyers that want to merge their exempt 401(k) plan with a new 401(k) plan acquired in a transaction may combine the plans and exempt the combined plan from the Autoenrollment Requirements if (1) the merger of the plans occurs no later than the end of the year following the year of the transaction and (2) the new 401(k) plan is merged into the exempt plan so that the exempt plan is the continuing plan.

To avoid losing any planning opportunities, companies engaging in a transaction involving a new 401(k) plan should, early in the transaction, carefully consider their post-closing harmonization strategy and how any post-closing merger could impact their exempt 401(k) plan.

10. New State Data Privacy Laws in 2024

Businesses should be aware of comprehensive data privacy laws taking effect in 2024 as more states aim to protect consumers’ personal data. Utah already implemented its new data privacy law as of December 31, 2023, and other states will follow suit in 2024, with the new data privacy laws coming into effect on March 31 in Washington, July 1 in Oregon, Texas, and Florida, and October 1 in Montana.

To prevent the misuse of consumer’s personal information, these laws mandate specific privacy notices, limit certain data collection, and grant individuals more control over their personal information.

Companies should consult the data privacy laws of each state in which they operate and review and update their data privacy policies and processes to ensure compliance with the new laws.

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Essential legal and financial considerations for starting a business

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Starting a business is an exciting endeavor filled with hope and possibility. But along with that excitement, it's important to keep in mind the essential legal and financial considerations that should be taken into account before diving in. From choosing the right business entity to understanding tax laws, the decisions made at the beginning of your business journey will impact its success for years to come. In this article, we'll explore some of the most critical legal and financial aspects to keep in mind when starting a new business.

Legal considerations

Choosing a business structure.

Choosing the right business s tructure is an essential legal consideration. The business structure that you choose will determine how your business is taxed, how you will be held liable for your business's debts, and the level of administrative paperwork your business will need to handle. Depending on your circumstances, you may choose to register your business as a sole proprietorship, partnership, limited liability company (LLC), Corporation or nonprofit organization.

Sole proprietorship is the easiest and least expensive structure to create. However, the owner is held personally liable for all the business's debts.

In a partnership structure, two or more people share ownership of a business. Partners are still held personally liable for any debts or legal issues the business incurs.

An LLC protects its owners' assets. It provides more flexibility in terms of taxation and management structure but it is more expensive and time-consuming to set up when considering the formation cost and approval time of an LLC .

A corporation has its own legal identity, separate from its owners. It provides the maximum protection from personal liability, but it is expensive and requires a lot of paperwork.

Lastly, nonprofit organizations are formed for charitable or community purposes and are exempt from paying taxes. They require a different legal process for formation and approval. For instance, churches and church-controlled organizations that fall under the nonprofit class can be formed using services like  GovDocFiling .

Choosing the right business structure requires careful consideration of your business's goals, level of risk involved, and personal circumstances. It's recommended to seek legal advice before making a decision.

Obtaining necessary permits and licenses

When starting a business , it is important to obtain the necessary permits and licenses required by law. These permits and licenses vary depending on the type of business and location. However, failure to obtain the proper permits and licenses can result in hefty fines or even the closure of the business.

To obtain the necessary permits and licenses, entrepreneurs must research their state and local laws. They should also check with the relevant agencies to understand the specific permits and licenses required for their business. This may include business licenses, health permits, building permits, environmental permits, and more.

Once the entrepreneur understands the requirements, they must fill out the necessary paperwork and submit it to the appropriate agencies. Some permits and licenses may also require an inspection of the business premises before they are issued.

In addition to obtaining the necessary permits and licenses, entrepreneurs must also stay up-to-date on any changes in laws and regulations. Failure to comply with new or updated regulations can result in fines and other legal consequences.

Protecting intellectual property

Protecting intellectual property is essential for any business to safeguard its original ideas, inventions, or creations. It can include:

  • Trademarks: Registering a trademark provides exclusive ownership over the brand, logo, or business name.
  • Patents: Obtaining a patent protects the invention or process from being copied or stolen by competitors.
  • Copyrights: Protects original written or artistic work from being reproduced without permission.
  • Non-disclosure agreements (NDAs): Confidentiality agreements are important for protecting any sensitive information about the business, such as trade secrets, customer data, or proprietary processes.
  • Monitoring infringement: It is crucial to keep an eye on potential infringement of intellectual property and take prompt legal action when necessary.
  • Seeking legal advice: Consultation with an attorney can help assess intellectual property risks and ensure adequate protection.

Understanding employment laws

When starting a business, it is essential to understand employment laws to avoid legal trouble. Employment laws can apply to different aspects of business, such as hiring practices, employee benefits, and termination policies.

Some crucial employment laws to understand include equal opportunity laws, minimum wage and overtime requirements, anti-discrimination laws, and laws related to employee safety and health. You should also be aware of the laws on employee termination, including reasons for termination and required notice periods.

Familiarizing yourself with these employment laws will protect you from potential legal issues and ensure that your business operates ethically and fairly. For further assistance, consult an attorney or experienced HR professional.

Financial considerations

Creating a realistic budget.

Creating a realistic budget is an essential financial consideration for starting a business. Here are some key points to keep in mind:

  • Identify all start-up costs, including rent, utilities, equipment, and supplies.
  • Estimate ongoing expenses such as salaries, marketing, and insurance.
  • Determine projected revenue and set realistic sales goals.
  • Plan for unexpected expenses or emergencies.
  • Evaluate the budget regularly and adjust as needed.

By creating a thorough and thoughtful budget, you can avoid financial pitfalls and ensure the long-term success of your new business venture.

Obtaining funding

Obtaining funding is a crucial consideration for starting a business. To secure funding, entrepreneurs can explore various options such as bank loans, grants, venture capital, crowdfunding, or personal savings. Each option comes with its own set of advantages and disadvantages. A bank loan may require collateral and a strong credit history, while venture capital involves giving up some control over the business. Crowdfunding can be a great way to generate interest and funds, but it may require a lot of upfront effort and still not yield the desired results.

Before approaching any form of funding, it is important to have a clear business plan, financial projections, and a well-articulated pitch to present to potential investors or lenders. These documents should demonstrate the viability and potential of the business, as well as the entrepreneur's expertise and commitment.

Once funding is obtained, it is important to manage it wisely. Proper financial management can help ensure that the business stays on track and grows in a sustainable way. This includes keeping accurate records, monitoring expenses and cash flow, and regularly reviewing and adjusting the budget as needed.

Overall, obtaining funding is a critical step in starting any business. Entrepreneurs must carefully weigh their options and be prepared to present a compelling case to potential investors or lenders. With careful planning and financial management, they can turn their business ideas into successful ventures.

Understanding tax obligations

When starting a business, it is important to understand your tax obligations in order to avoid any legal or financial issues down the line. Here are some key things to keep in mind:

  • Federal, state, and local taxes: Depending on where your business is located and what type of business you have, you may be subject to federal, state, and/or local taxes. It is important to understand the different types of taxes and how they apply to your business.
  • Sales tax: If your business sells goods or services, you may be required to collect sales tax from customers. Make sure you understand the rules and regulations around sales tax in your area.
  • Payroll taxes: If you have employees, you will need to withhold taxes from their paychecks and pay them to the appropriate taxing authorities. You will also be responsible for paying employer taxes, such as Social Security and Medicare taxes.
  • Estimated taxes: If you are self-employed or have income that is not subject to withholding, you may need to make estimated tax payments to the IRS and/or state taxing authorities.
  • Deductions and credits: There may be deductions or credits available to your business that can help reduce your tax liability. For example, you may be able to deduct certain business expenses or claim a credit for hiring certain types of employees.

Make sure you work with a qualified tax professional to help you understand your tax obligations and keep your business in compliance with the law. By staying on top of your taxes, you can avoid costly penalties and fines and keep your business running smoothly.

Keeping accurate financial records

Keeping accurate financial records is critical for the success of any business. It involves:

  • Recording all financial transactions: Keeping track of all financial transactions helps in knowing the cash flow and the profit or loss of the business every month.
  • Separating business and personal finances: Maintaining a separate bank account and credit card for the business can improve record-keeping and make tax preparation easier.
  • Tracking expenses: Monitoring expenses helps in identifying unnecessary expenses and controlling them. Utilizing bookkeeping software or hiring a professional can help in keeping track of expenses.
  • Recording sales and revenue: Accurate recording of sales and revenue helps in calculating the business's income and future projections. This can assist in forecasting future earnings and making necessary budget adjustments.
  • Understanding tax obligations: Recording financial transactions accurately and maintaining this information properly can assist in meeting tax obligations.

A certified public accountant can provide guidance in this area.

Overall, keeping accurate financial records is essential for any business and can assist in financial planning and decision-making.

Starting a business can be exciting, but it involves several essential legal and financial considerations that must be addressed before launching the venture. One must choose a legal structure that fits the business needs, secure the necessary licenses and permits, and register the business with the government. Financial considerations include creating a budget, estimating startup costs, and determining how the business will generate revenue.

Entrepreneurs must also create a business plan that outlines the target market, marketing strategy, business model, and growth plan. It is vital to seek professional advice from attorneys, accountants, and business advisors to ensure the legal and financial aspects of the business are fully addressed.

Finally, entrepreneurs must secure business insurance, including product and liability insurance, to protect the business in the event of unexpected circumstances.

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What Must an Entrepreneur Do After Creating a Business Plan?

  • Last Updated October 5, 2022

business plan legal considerations

Many successful entrepreneurs started with a solid business plan detailing factors of their business such as marketing, funding, legal considerations, and operations. But then what must an entrepreneur do to turn their vision into reality?

What’s Included in a Business Plan?

A business plan is a formal document that justifies the idea with research, defines the steps to starting the business, and details the growth and management of the business after launch. A strong business plan typically includes:

  • Executive Summary and Company Description: Key terms and summary of the business and its goals.
  • Market Research and Analysis: The findings of market research and projection of success in the target market.
  • Marketing and Sales: A strategy to optimize the business for the market, based on market research analysis: Who is the target audience? What products and strategies should be the focus for sales? The likely includes the go-to-market strategy for pre-launch and launch as well as sales operations and infrastructure.
  • Organization and Management: A plan for the organization of departments and management, as well as the number of employees needed. Includes budgeting for salaries and benefits, as applicable.
  • Financial Projections and Funding Requests: The projected revenue of the company versus costs, as well as any plans for necessary funding like investments.

What Are the Steps to Take After the Business Plan?

1. Build the Initial Team

Few entrepreneurs can manage every aspect of a new business alone. They should focus on what they can do well and delegate other tasks to a strong team. For example, that might mean hiring a web designer or financial consultant.

2. File Necessary Legal Documents

To legally protect a business and make sure taxes are in order, it’s necessary to file proper forms with the IRS and other applicable governing bodies. Some business owners may choose to form a limited liability company (LLC) , while others may incorporate their business. Choosing the right business structure requires quite a bit of thought and should be completed in the business plan.

3. Protect Intellectual Property

Without proper legal protection, business owners have no formal recourse if someone else uses their designs or branding. Understanding the differences between trademarking, copyrighting , and patenting is critical, as each protects different types of intellectual property . For example, trademarking can protect branding assets, copyrighting can protect creative content such as books, and patents can protect product design. Ideally, this step would be completed prior to any launch.

4. Advertising and Marketing

Part of the business plan is a go-to-market strategy, which includes pre-launch, launch, and, often, post-launch marketing plans. Once the business is legally established and the initial intellectual property has been protected, it’s time to implement the pre-launch marketing. This may include social media marketing, the establishment of a blog, or more traditional print marketing such as fliers. The goal? Get the word out to your prospective customers so they can buy at launch.

5. Official Business Launch

This is an exciting time for any entrepreneur—the moment their hard work takes center stage and their product goes public for purchase. Ideally, the necessary production and marketing stay on the launch schedule established in the business plan. Many business owners start tracking marketing and sales data immediately so they can pivot quickly if something isn’t working properly.

6. Review Business Performance and Progress

Many business owners benefit from frequent reviews of their sales and marketing data. For a younger business, it’s common to conduct monthly or quarterly reviews to adjust quickly. As the business matures, frequency may decrease to annual reviews with smaller quarterly reports. Either way, setting goals and metrics based on the business plan keeps a business on track and focused.

The Next Step: Scaling the Business

With the initial business plan implemented successfully, business owners often ask themselves what comes next. Plans for growth and scaling the business may have been outlined in the initial plan, but have the plans changed? Possibly, which is why consistently measuring performance and aligning goals is critical.

Often, the end of the initial business plan is just the beginning of an entrepreneur’s journey. Understanding how to legally protect the business you’re building is key to keeping momentum and stability as you grow from launch to scaling.

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Startups Should Understand All The Key Components Involved In Writing A Business Plan

  • May 6, 2019

Key Considerations When Writing a Business Plan for Your Startup

  • --> Written by Nick Price

Steve Jobs said, “If you really look closely, most overnight successes took a long time.”

Starting a business is an exciting venture! It takes a lot of time, dedication and perseverance. The emotional and financial payoffs can be memorable.

Every business needs a business plan no matter how large or small it begins. Writing a business plan isn’t a difficult task. To write a good business plan takes a lot of thought and consideration. There are many templates available to help you get started. Think beyond the blank lines to how you can customize your business plan so that you can really make it your own.

There are countless things to consider as you prepare to write your business plan that will have a major impact on the final result.

If your business plan includes forming a board of directors, it’s wise to factor the cost of a BoardEffect board management software system into your plans to help your business get off the ground based on sound good corporate governance principles.

Here are a few things to give you some food for thought before you get started writing your business plan:

Key Considerations for Startup Businesses

It’s been said that timing is everything, and there’s certainly a lot of truth to that when it comes to deciding the best time to launch your business. Starting a business is incredibly time-consuming in the early months, so it’s wise to consider whether your lifestyle will allow you to dedicate the necessary time to pursuing a successful startup.

Think about what is going on in your life and how that may (or may not) change in the next few years. If you’re getting married, having a child or dealing with a debilitating illness, it might not be the best time to launch a startup.

Finances play a big role in timing a startup business . Do you have the funds to start a company? Do you have a plan for how to obtain startup funding? Will you be quitting a job that currently pays the bulk of your bills?

If you’re ready to go, complete your business plan, make those important decisions and stick by them!

Be sure to bear down on your budget. Large chunks of startup money whittle away quickly. Think through your startup and maintenance expenses thoroughly so you know what to expect. Get advice from other business owners and account for every expense and every penny.

If you lack discipline, starting a business might not be for you. You’ll need to form a budget and stick to it. Set goals for the day, week and month until you settle on a good flow. Establish benchmarks and put in overtime as needed. Don’t forget to think about work/life balance so you don’t burn out before you get started.

Sharpen your social skills. Build on your current network or get started building a new one. Talk up your new business at every opportunity.

Be sure to tie up all loose ends at the end of each day. If you don’t know how to do something, take the necessary steps to figure it out. Be flexible. There may be more than one way to do something. Don’t be afraid to step outside of the box and try something new.

Parts of a Business Plan

Writing a business plan is as easy as following directions or making a recipe. A business plan has distinct parts with specific instructions. The following is an outline for a standard business plan.

The Executive Summary

The Executive Summary is a one- to four-page summary that spells out the key points that you will describe in each section of the business plan that follows. The Executive Summary should stand alone as its own separate document.

Business Overview

The Business Overview heads up the first page of your business plan. This part of the business plan describes your business. It should include your business’s legal structure, a short history of how you formed your business, the type of business and the location. The Business Overview should also include a description of the means of how you will do business, whether it’s a brick-and-mortar store, the internet, mail order, a subscription box or something else.

Operations Plan

The Operations Plan provides a brief explanation of how the business will function. Describe the physical setup, who will fulfill various responsibilities and who will tend to certain tasks.

Market Analysis

The next section is the Market Analysis. Provide a brief overview of the market as a whole. Graphs, charts and infographics may be useful to paint an accurate picture of your business, at it will be in the scope of the industry. Clearly define your target market and how you plan to reach them.

Products and Services

In this section, you will provide a description of your products or services. Classify and categorize them and provide a succinct description of each.

Sales and Marketing

This is the place to outline your pricing and sales information. Describe your reasons for why you believe these are the best price points and what will attract your target audience to your products or services. Describe your plans for the marketing and advertising efforts that will lead you to your target audience.

Competitive Analysis

Figure out who your direct and indirect competitors are and analyze their strengths and weaknesses. Describe your plans to gain an edge over your competition.

Management Team

Describe in this section who your top leaders will be. Provide biographical information on all key staff.

Financial Plan

Outline the amount needed to start and maintain the business. Project how much will be required to maintain the business for the next two to five years. Describe how you plan to use the funds and whether you have a plan for additional funding. The costs for your board portal go in this section as a business expense. Carefully think through all business costs, including business supplies, business expenses, salaries, insurance costs, promotional expenses, marketing and any other financial information.

Projections

Write up income statements with financial projections for at least two or three years.

Finally, attach all supporting documents to your business plan. Include biographies of key managers, articles or media on the company, and any other relevant documents.

A board management software system such as BoardEffect is essential to a successful business. The portal is highly secure and provides unlimited cloud-based document storage for all of your startup documents. It’s a valuable tool that will help you keep your company in legal compliance and assist you in getting off the ground on the best possible footing. BoardEffect commits to adding innovative solutions as your business evolves to support business growth now and in the future.

INTERESTED IN LEARNING MORE?

Learn why 180k+ users are using BoardEffect for their board portal solution!

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Business Structuring , Small Business , Startups

Top 6 legal considerations for a start-up business.

Legal considerations for small business

Starting a business is exciting!  It is, however, important to comply with all necessary legal requirements to ensure your business is adequately protected from the outset.

Due to a lack of experience, knowledge and resources, start-up business founders tend to overlook the following top 6 legal considerations.

Consideration 1

Choosing the right structure for your start-up business.

Choosing the right structure for your start-up business is one of the most important decisions you will make as a new business owner.  The business structure you choose to operate under will affect your level of personal liability, the amount of tax you pay, your control over the operations of the business, and your growth potential.  Bearing in mind there are advantages and disadvantages to each structure.

Business structure types in Australia

The most common legal structures for business are:

business plan legal considerations

Sole trader

You have personal liability for the debts of the business and you need to report all business income on your personal tax return.

Partnership Business Structure

Partnership

This is similar to a sole trader, but you share profits (as well as losses) with your partners and are personally liable for the debts of the business.

business plan legal considerations

In this structure, a trustee (either an individual or company) carries out the business on behalf of the members (also known as beneficiaries) of the trust.

Company PTY LTD business structure

A company is a separate legal entity owned by shareholders and managed by directors that are appointed by shareholders. As a company is a separate legal entity, it declares income and is responsible for liabilities of the business.

Consideration 2

Shareholder/partnership agreement.

If you set up your company with co-founders, you will need a shareholders’ agreement.   A shareholders’ agreement will cover important considerations such as:

  • What decisions directors and shareholders can make
  • How often directors and shareholders will meet
  • The sale of shares
  • How dividends will be paid
  • Selling the company
  • Dispute resolution

business plan legal considerations

A good shareholders’ agreement will have a Deed of Accession.  This deed is signed by the company and the new shareholder rather than having each shareholder re-sign the shareholder agreement.

If you develop your start-up business with a partner, you will need a partnership agreement.  A partnership agreement will clearly set out the role of each business partner, the management of company profits and terms for ending the partnership or winding up the business.

Consideration 3

Employee/independent contractor agreement.

In order for your business to grow and succeed, you will need to hire employees and/or contractors.

Employees are covered by national and state based legislation including the Fair Work Act .  Employees are entitled to (amongst others things) minimum wages, sick leave, annual leave and superannuation.

Contractors are independent and run their own business.  In general, you are not required to pay their insurance, superannuation or PAYG tax.

Employee and independent contractor agreement

You need to correctly assess whether the worker is an employee or contractor as each has different rights and entitlements.  If you get this wrong, you may be legally and financially liable.

Once correctly assessed, you need to document the relationship using either an employment or independent contractor agreement.  Regardless of the agreement, it will cover (amongst other things) the worker’s role, remuneration, entitlements and employee obligations.

Consideration 4

Terms and conditions.

Most start-ups have an online presence, for which your business is liable.  Hence, it is vital to nail your terms and conditions.

If you have a website, you need website terms of use.  These terms, which are between you and visitors to your site, reduce your liability and inform visitors about acceptable behaviour of use.

If you sell products or services, you need business terms and conditions.  As well as addressing consumer law requirements, business terms establish the basis on which you will provide your products or services to a client.

Terms and conditions for business website

If you have an online marketplace, you need marketplace terms and conditions.  These terms are complex to draft, as they address the rights and obligations of all users interacting in the marketplace i.e. buyer, seller and marketplace owner.

Consideration 5

Privacy policy.

Your business needs a privacy policy if it intends to collect personal information from its clients.  The purpose of a privacy policy is to show clients how you will use their personal information.  A privacy policy that is compliant with the Privacy Act will address the following.

  • The type of information you will collect.
  • How this information will be used.
  • If this information will be disclosed to third parties and, if so, to whom.
  • Whether this information will be stored and, if so, where.

If you email promotional material to your clients, you need to disclose this in your privacy policy.  In doing so, you will comply with the Spam Act .

Consideration 6

Protect your ip.

Your IP is your most valuable asset and you must protect it.

The most common types of IP include:

Trademark Lawyer, helping businesses around Australia protect their intellectual property.

A trademark is a sign or symbol that is used to distinguish your product or service from those of your competitors.  Trademark registration gives the owner the exclusive right to use and license the trademark, within Australia, for a period of ten (10) years from the date of filing and can be renewed indefinitely.  You do not obtain these rights by registering your business name, company name or domain name.

To varying degrees, every company will require trademark protection .  In the case of start-ups, this typically involves trademarking their business name and logo.

Before registering a new business or company, you should conduct a trademark search to ensure you are not infringing an existing trademark.

Copyright for businesses

Copyright protects the owner’s original expression of an idea rather than the underlying idea itself.  In the case of start-ups, copyright may extend to website content, layout and software source code.  For an idea to receive copyright protection, it must be original, recorded in material form and connected to Australia.  There is no need to register for copyright.  Instead, an idea has automatic copyright protection once it is expressed.

business plan legal considerations

A patent is a legally enforceable right for a device, substance, method or process.  For your application to be successful, your invention must be new, useful and inventive or innovative.  Not every business needs patent protection.

business plan legal considerations

Confidentiality agreement

You can protect your IP by having employees and contractors sign a confidentiality agreement that states they will not use or disclose your IP to anyone during and after their employment with you.

Are you starting a business?

Starting a business is exciting but it is important to comply with all necessary legal requirements to ensure your business is adequately protected from the outset. if you’re thinking about starting a business and would like to discuss any of the above. we would be happy to assist you., related resources.

business plan legal considerations

Business Structuring

Business Structures: Partnership

Business Structures: Partnership When commencing a business venture, it is necessary to consider the most appropriate type of business structure to put in place. In Australia, there are 4 common business structures – sole trader, partnership, trust and company. Different business structures have different benefits and disadvantages. This article looks...

business plan legal considerations

Business Structuring Small Business

Business Structures: Sole Trader

When commencing a business venture, it is necessary to consider the most appropriate type of business structure to put in place. Different business structures have different benefits and disadvantages. This article looks at the sole trader business structure – how to set up as one and the pros and cons...

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Legal Considerations in Today’s Businesses

March 19, 2021 > Cyprus > Corporate and Commercial

CHAMBERSFIELD ECONOMIDES KRANOS | View firm profile

The disruptive force of the Covid-19 Pandemic has disturbed the balance of all businesses’ operations and changed the way people think and act. Today’s world strives to adapt to continue functioning, retain economic stability and society’s welfare.  

In this new reality, businesses are in a high anxiety state and undertake intensive actions to secure their staff and retain business relations with clients, shareholders, stakeholders, and partners.

Even though the crisis is critically affecting our way of life, there are intricate business alerts that entrepreneurs should not neglect and seek ASAP the assistance of professional legal advisors and consultants to confront them successfully.

Business Alerts

Business endurance.

Businesses should form an effective business continuity plan with strategies that target the  business’s continuation .

Professional legal assistance is needed when forming the business continuity plan to safeguard that the business fully complies with the legislative framework, i.e.:

  • contractual relationships
  • employment contracts
  • compliance of the industry with its obligations before governmental authorities
  • business relationships of company’s affairs with employees, clients, suppliers, shareholders, and stakeholders.

Business Insurance Coverage

In today’s business environment, many companies have business insurance coverage plans.

Consequently, the company’s legal advisors should thoroughly examine the insurance policies and coverages to identify if compensations for the COVID – 19 pandemic exist.

It is noteworthy to mention that all insurance contacts are subject to high variations when coverage policies and exemptions are concerned.  Chambersfield Economides Kranos lawyers can evaluate your business insurance contract and identify possible coverages according to the contractual and related pandemic litigation, as well as determine the coverage percentage of the cause.

Employment Law

Almost all the governments of the world, during the pandemic outbreak, issued supportive measures and degrees to safeguard business operations, social welfare and prevent mass layoffs.

Moreover, governments issued a safety and security degree for tackling the pandemic effects and provide a healthy, hazard-free workplace environment to all employees.

Despite the government’s efforts, many people have wrongly or unfairly being dismissed from their employment. Unfortunately, many of them were unaware of legislative and/or regulatory provisions aiming to safeguard their legal rights.

An unlawful employment dismissal depends on the individual situation and may violate the Termination of Employment Law, Violation of Constitutional Human Rights, or Breach of Employment Contract.

Subsequently, before proceeding with employment termination, businesses should consult their legal advisors to determine if there is a violation of employment rights.

Privacy and Security

There are many questions concerning network privacy and security on remote work, especially today that social distancing is promoted as a prevention measure of Covid-19 pandemic spread.

Due to pandemic measures, “business as usual” is disrupted, and the vast majority of companies proceeded with the introduction of remote work to maintain their sustainability.

At the same time, the implementation of “working from home” raised safety questions to companies regarding:

  • The disclosure of sensitive data processed or saved in the company’s systems,
  • Possible unauthorized access or disclosure of data,
  • Unsecured Networks that are vulnerable to viruses, malware, etc.

Consequently, companies, to overcome those problems should assess their policies:

  • of remote access in their systems and develop regular risk checks,
  • adopt continuous monitor techniques,
  • and enhance employees’ security access points by implementing double system authentication techniques and encryptions.

Besides, special attention should be given to employees’ training and system defense mechanisms to prevent spear phishing, whaling, smishing, and vishing that flourish during a crisis.

Concurrently, companies should define their policies for gathering and receiving health-related information about their visitors, employees, and third parties to be fully compliant with the EU General Data Protection Regulations (GDPR).

The needs of each company vary according to the nature of the business operations and activities.  For privacy matters and  GDPR  compliance, it is highly recommended to seek the advice of the professional lawyers of Chambersfield Economides Kranos.

It is noteworthy to mention that companies that do not implement the appropriate measures may face sudden threats and consequences.

Contractual Relationships

The coronavirus pandemic has undeniably affected the world economy and created massive negative impacts on all commercial contacts and activities.  Countless trade contracts were affected, and many business transactions were canceled or postponed.

Also, concerning contractual relationships, the pandemic has raised reasonable questions of who will be accountable and bear the financial losses of not meeting the contract obligations.

Additionally, a wise confrontation should be the implementation of crisis management strategies that will help in minimizing the effects of the outbreak i.e.

  • Negotiation attempts will involve parties with suggestions that may solve the problem.
  • Implementation of relief strategies
  • Formation of a Contingency plan
  • Legal risk analysis
  • Revision of contract clauses
  • Governing law, etc.

It is also highly recommended for overcoming contractual relationship vulnerability to seek the consultation of Chambersfield Economides Kranos, legal and business consultants.

The firm’s legal consultants can help form a crisis management plan, which will contain actions that will safeguard your firm’s contractual relationships and business operations.

Financial Concerns

Many companies and individuals have experienced financial distress for their earnings, cash flow, and loans after the pandemic outburst.

Also, many companies had to appeal for restructuring their contracts and agreements to cope with the pandemic consequences and continue their business operations.

The answer to business sustainability does not lie only with loan restructuring but with overall business restructuring due to Covid-19 unpredictable era effects.

Thereupon, for a successful restructuring of your business, entrepreneurs should appoint legal experts that will perform a thorough analysis of the company’s current situation and propose sustainably solutions.

Merges and Acquisitions

As previously stated, the Covid-19 pandemic has had a significant negative impact on all business activities, not only in nearly every sector of the economy but also on Mergers and Acquisitions transactions.

Many M&A transactions after the outbreak were affected in terms of:

  • Financial Risk – due to future uncertainties on the behavior of the economy, in M&A transactions, entrepreneurs have shown hesitation on whether they will proceed with the transaction, cancel, or postpone it.
  • Value – The conditions of the international market have changed dramatically.

Nowadays, we observe spontaneous economic tendencies. Therefore,  entrepreneurs are in the process of re-evaluating M&A pricing and risks before reaching a decision.  Also, in M&A re-evaluation, a great emphasis is being given on financial due diligence indicators, i.e., capital funding, continuity business plans, risk management, etc.

  • Sustainability – entrepreneurs evaluate possible business sustainability scenarios before proceeding with the M & A transaction.

Additionally, entrepreneurs attempt to identify policies that will ensure the successful continuation of their business operations and mitigate the risks of market fluctuations.

With that said, today’s entrepreneurs are in more need of cooperation with lawyers that have great experience in cross-border transactions, M & A, and crisis management.

Intellectual Property Rights

Intellectual Property Rights have been highlighted even more during the pandemic era.

Subsequently, businesses should find “out-of-the-box” solutions to cope with the pandemic’s effects, which will sustain their operations and create new opportunities.

Several examples demonstrate this thinking in e-commerce, IT, pharmaceutical, etc.

For example, many IT companies seized the opportunity of social distancing and lockdowns and focused on technological developments.  It is a fact that the Research and Development department of Pharmaceutical companies got into the fight for developing vaccinations of immunity towards the coronavirus.

All new developments need to be assessed by the governmental authorities, register their IP rights, and acquire the license before entering the market.

The measures of the governmental authorities, as expected, created delays in the registration process of copyrights, trademarks, and patents.

Therefore, to avoid further procedure delays, it is highly recommended for your IP application and procedure be handled by experienced and accredited law firms.  The professional IP lawyers can provide the appropriate advice during the process, on a national and international level, and overcome any possible delays during the application stage.

Nowadays, e-commerce is deemed to be the leader of the retail industry. Movement restrictions, lockdowns, and social distancing were the main reasons that contribute to the e-commerce booming induced. As expected, companies that adapted fast to consumer behavior changes thrived.

It is undeniable when it comes to e-commerce, it is of utmost importance to be sure that your online business is compliant with the relevant regulatory and legislative framework.

Several laws pertain specifically and related to online businesses, including but not limited to intellectual property rights (trademarks, copyrights, etc.), privacy policies, terms of service, data protection, and consumer rights.

Therefore, for safeguarding your online business operations, it is recommended to search legal consultants’ advice and seek their assistance with all legal aspects related to online businesses’ formation and function.

More from CHAMBERSFIELD ECONOMIDES KRANOS

5 legal considerations for every new business or startup

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By Ursula Hogben Board Advisor

Updated on May 3, 2017 Reading time: 5 minutes

This article meets our strict editorial principles. Our lawyers, experienced writers and legally trained editorial team put every effort into ensuring the information published on our website is accurate. We encourage you to seek independent legal advice. Learn more .

1. What business structure should I have and why?

2. how do i protect my business online.

  • 3. Shareholders Agreement
  • 4. How do I hire – Employment or Contractor Agreement?

5. Privacy Policy

Starting a business is risky, but the rewards can be great. Make sure to establish your business plan from the outset, so you have direction from day one. While sales and traction are vital to survival in your market, ensuring that all legal considerations are accounted for is equally important for your business to thrive. Here are 5 legal considerations that every  new business  should make:

What business structure you choose to operate under may influence how much tax you pay, your level of liability and how much control you have over the operations of your business. Keep in mind that there are advantages and disadvantages to every structure:

Sole trader  – you have personal liability for the debts of your business, and you need to report your income on your personal tax return.

Partnership  – this is similar to a sole trader, but you share profits as well as losses with two more people (your partners) and are personally liable for the debts of the business.

Trust  – a trust is where a third party has control of the business and the profits go to someone other than that third party known as the beneficiary.

Company   – a company is a separate legal entity, and the people who control it are usually shareholders and directors of the company.  As a company is a separate legal entity, it declares income and is responsible for the liabilities of the business.

If you have a website, you need Website Terms of Use to protect it. These terms are between you and visitor to your site.

If you sell products or services or run a marketplace, then you need Business Terms to address consumer law and other issues.

Website Terms of Use – The majority of startups have an online presence, including a website and/or social media pages. Your business has liability for these. You will need Website Terms of Use for your website to reduce your liability on your end and to ensure users of your site are informed about acceptable use of the site. If users may rely on the information you upload to the site, and potentially come after you with issues, then Website Terms of Use are an absolute essential.

If you are planning on selling services or products in an online marketplace, you must have business terms and conditions that are comprehensive, easy to find and accept for visitors to your website. The terms and conditions themselves will vary depending on the products or services you are selling.

Client Agreement – If you are a business that sells services, you will benefit from having a Client Agreement in place. It establishes the terms upon which you provide a service to a client. It will address yours and your clients’ obligations and rights, but more importantly limits your liability and provide legal protection of your commercial interests.

Sales Terms and Conditions –If you focus on selling products, have a lawyer draft appropriate Sales Terms and Conditions. The terms covered by Sales Terms and Conditions will be similar to those included in the Client Agreement. Additional terms will deal with delivery, exchange and repair of goods, as well as provisions relating to compliance with the Australian Consumer Law.

Marketplace Terms and Conditions – Will your website facilitate the exchange of goods and services between visitors? Are you making a platform for a marketplace to operate? If so, Marketplace Terms and Conditions will be crucial. These are fairly complex, as they need to set out the rights and obligations of all users interacting within the marketplace.

3. Shareholders Agreement

If you and co-founder or partners are setting up a company together, it is prudent to have a Shareholders Agreement. The Shareholder Agreement can be thought of as your ‘business prenup’, as it will set out terms for the management of company profits and assets under various circumstances such as a partner leaving the business. It also details the role of individual partners including their rights and responsibilities, how the company can be wound up, and what to do in the event that one of the shareholders is no longer able or willing to participate in the operation of the company.

4. How do I hire – Employment or Contractor Agreement?

Once you begin to grow as a business, you need to hire staff. It is important to understand if these people are employees or contractors. They have different rights and entitlements, including sick leave, annual leave and superannuation. If you get this wrong, you are potentially liable legally and financially. For example if you’ve hired someone as a contractor, but they are actually an employee, then on top of what you have paid them, you can be liable for superannuation.

Once you’ve correctly categorised the new hire, you need the correct legal agreement; either an Employment Contract or a Contractor’s Agreement.

The agreement will detail the worker’s role, remuneration, entitlements, and employer obligations to their staff. If you need one of these agreements drafted, speak with an employment lawyer to ensure that the most pertinent provisions have been considered, such as restraint of trade and confidentiality.

If your business collects personal information and uses it for marketing or similar purposes, then your business needs a Privacy Policy. It must comply with the  Privacy Act  and to show your clients how you will use their personal information. A comprehensive Privacy Policy should set out the type of information you will collect, whether this information will be stored and, if so, where, and whether it will be disclosed to any third parties and, if so, to whom. In addition, if you intend on sending promotional materials to users, you should give them a notification alerting them to the fact that they have been added to your mailing list. This will protect you from inadvertently breaching the  Spam Act,  and will also ensure you maintain your strong brand image and customer service.

Starting up a new business is an exciting time, but it is important that you fulfil all the necessary legal requirements and ensure that your business is adequately protected. If you’re thinking about starting a new business and would like to discuss any or all of the above issues with a LegalVision small business lawyer , just call us on 1300 544 755 or fill out the online form available on this page and we will be happy to assist you!

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New York Tech

Self-Employment 101: A Guide to Starting the Process

A re you considering taking the path of entrepreneurship but feeling unsure where to begin? Well, you’re in the right place! Our guide below will go over some tips for starting the process of your self-employment journey and joining the 16 million Americans who identify as self-employed.

Keep reading to learn more about being self-employed.

Identify Your Passions and Interests

When you start a business, you have the chance to turn what you’re passionate about into a profitable venture. First, you will need to take some time to do some self-reflection. Think about what activities you enjoy and what you’re truly passionate about.

Also, think about the problems you enjoy solving, either for yourself or others. Most businesses emerge from addressing certain challenges. So, if there’s a problem you’re passionate about solving, this could be your starting point for your business venture.

Once you have some things in mind, it’s time to conduct some market research. You want to explore niches and industries that already exist. The goal is to find any gaps where your idea can fit in and help others.

Create a Business Plan

Creating a business plan is a critical step in starting any business. Briefly describe your business idea, its unique value proposition, and the problem it solves. Outline your short and long-term objectives and what you aim to achieve with the business.

You also want to define the purpose and mission of your business. Think about the legal structure of your business. The most common choices are sole proprietorship, LLC, and partnership.

It’s also important to analyze the industry your business will operate in and its current trends. Define your target audience and their specific needs in your business plan. You will also have to do a competitor analysis, where you evaluate who your competitors are along with their strengths and weaknesses.

Your business plan will need a section where you write all the details about your product or service. Highlight what makes your business product unique and different from anything else out there.

There should also be a section for your implementation plan. Create a timeline for launching your business where you include key milestones. Write down the tasks and responsibilities for you to implement the plan.

Keep in mind that the business plan you create will continue to evolve as you get started. You want to revisit this and adjust the plan as needed. Think of this plan as your roadmap that will help with day-to-day operations and even securing funding.

Legal and Practical Considerations

Once you have a business name and have decided on which legal structure is best, you will need to register your business. Depending on where you live, there are certain local, state, and federal authorities you will need to follow to stay legit. This is also where you have to see if your industry or location requires certain licenses or permits to operate legally.

For example, if your business deals with food, public health, or hazardous materials, you might need specific health and safety permits. If your business impacts the environment, then you will more than likely need environmental permits.

You can’t forget about Uncle Sam because self-employment taxes are a must to avoid any fines or legal issues in the future. You will have to keep track of all your income and expenses. It’s also a smart idea to estimate quarterly taxes because it will help you not fall behind when tax season comes around.

We recommend setting up an accounting system to help you manage all the money that comes in and out for business purposes. If you don’t have the time or are not good with finances, then you might want to consider hiring an accountant. There’s also the option to use accounting software that is linked to your bank account that does most of the sorting for you.

If you have a brand name, logo, or product that you feel people can easily use as their own, you might want to consider protecting it through copyrights and trademarks. Also, if you deal with sensitive information, then you want to use confidentiality agreements to help safeguard your data.

Marketing and Branding

The foundation of your business image is your brand identity. Part of your brand identity is your business logo, name, typography, and color scheme. The more consistent you are with these elements, the more you will create a strong and memorable presence where people start to associate your colors with your business.

For example, most people think of Target when they see red circles or Starbucks when they see a certain shade of green. The reason is that these brands have been very consistent with their color scheme throughout the years.

When you are working on your marketing, you want to identify what your unique selling proposition (USP) is. These are the things that set your business apart from the competition. When you highlight your own USP, it will help customers understand why they choose your products or services instead of your competitors.

You have to understand your target audience so that you can speak to them through your marketing. During your research, you have to identify where your target audience likes to spend their time. The goal is to show up where they are hanging out so that you can reach them.

This includes speaking to your target audience through social media platforms. This is a great place to meet and speak to your target audience.

Now You’re Familiar With Starting the Process

Taking on the task of becoming your own boss can be both exciting and challenging at the same time. Sometimes you will find yourself working a lot more than a 40-hour work week, but it’s satisfying because you are doing it for your own company instead of growing someone else’s company. As you can see, starting the process doesn’t have to be complicated.

Did our article help you out? We have more helpful guides, so make sure you check out the rest of our business section.

This article is published by NYTech in collaboration with Syndication Cloud.

Self-Employment 101: A Guide to Starting the Process

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Considerations of business plan

10 Key Consideration For Writing a Business Plan

Creating a business plan is like building the foundation for your entrepreneurial journey. It’s the roadmap that turns your business dream into a reality. To do this effectively, you’ll need a combination of skills and a clear plan, all operating within a well-structured system. In this article, we’ll delve into the essential components of a business plan, from the initial dream to skill development, and how they fit into your mission and an organized system.

1. Learn About Your Market:

2. know your competitors:, 3. describe how you’ll get customers:, 4. explain how your business works:, 5. show your financial plans:, 6. identify and deal with risks:, 7. set goals:, 8. create an engaging executive summary:, 9. update your plan regularly:, 10. get advice from others:, business plan considerations: 10 key points.

Creating a good business plan is like laying the foundation for your business dreams. It’s a roadmap that helps you navigate the ups and downs of starting a business. Here are 11 important things to include in your business plan: Explain What Makes You Special: In your plan, clearly state what makes your business unique. Who does it help, and why is it better than the competition? Keep it simple and easy to understand.

Use facts and figures to back up your claims. Find out who your competitors are, what the demand for your product or service is like, and any trends in your industry.

Learn how to write a DIY business plan now!

Study your competitors carefully. Understand what they do well and where they struggle. This will help you i dentify your own strengths and opportunities .

Explain how you plan to reach and attract customers. Cover everything from how you’ll advertise to how you’ll build relationships with your customers .

Tell the reader how your business is structured and what laws and regulations apply to it. Describe your day-to-day operations, what resources you need, and how you’ll get your products or services.

Paint a clear picture of your financial future . Explain how you’ll make money, how you’ll control your costs, and when you expect to start making a profit. Use charts and predictions to illustrate this.

Recognize the potential problems your business might face and explain how you’ll handle them. Base your plans on facts, not just hopes.

Explore our free sample business plans and kickstart your own business plan today!

Define your business goals clearly. Use the SMART method (Specific, Measurable, Achievable, Relevant, Time-bound) to set targets that will guide your journey.

Your executive summary should be a brief, clear, and interesting introduction to your business plan. Think of it as a trailer for your business story.

Your business plan is not set in stone. It should change as your business grows and evolves. Being flexible is important for success.

Don’t try to do it all by yourself. Seek feedback and advice from people who have experience in business, like mentors, advisors, peers, investors, and experts. Creating a business plan is both an art and a science. When done right, it’s a crucial tool for your business’s success. It showcases your vision and commitment, and it’s something others can trust. So, start writing your business plan today to set yourself on the path to success.

Connect with our experienced business plan writing consultant or our team of expert business plan writing consultants today to write a plan for your success.

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Bryghtpath

Business Continuity and Crisis Management Consultants

Decoding Crisis Legal Considerations for Businesses

Explore key crisis legal considerations for businesses. Learn about risk identification, compliance, data protection and effective communication.

crisis legal considerations

September 6, 2023 By //  by  Bryan Strawser

When it comes to crisis legal considerations , many businesses find themselves navigating uncharted territory. The complex web of regulations, obligations, and potential liabilities can be overwhelming.

I’ve spent most of my career helping organizations understand these complexities. From my early days in corporate security to leading crisis management for a global corporation, I’ve seen firsthand how crucial proper planning is.

Understanding your organization’s legal responsibilities during a crisis cannot be overstated. It’s not just about staying on the right side of the law; it’s about safeguarding your business and its reputation.

In this journey through crisis legal considerations, we’ll explore key areas that every business should focus on – from identifying risks to managing communications effectively. Let’s dive into this critical aspect of successful crisis management together.

Identifying Legal Risks

In the early days of Bryghtpath, we recognized that understanding potential legal risks was crucial to effective crisis management. This involves scrutinizing every aspect of operations, from industry regulations and contractual obligations to data protection measures.

Diving Deep into Legal Risks

A comprehensive analysis isn’t just about identifying possible threats; it’s a deep dive into your organization’s inner workings. We found value in meticulously reviewing contracts for clauses activated during crisis situations.

The Need For Regular Reviews

One thing became clear: Identifying legal risks wasn’t a one-off task but rather part of continuous review processes because laws change over time along with evolving business practices – factors that can significantly alter any organization’s risk profile.

This insight led us towards regular reviews supported by updated information reflecting changes within our sector or regulatory environment. Moving forward proactively instead of reactively when dealing with these issues has effectively navigated uncertainty here at Bryghtpath. The next section will delve deeper into how this approach extends toward ensuring regulatory compliance amidst managing crises.

Want to learn more about Crisis Management?

Our Ultimate Guide to Crisis Management contains everything you need to know about crisis management.

You’ll learn what it is, why it’s important for your organization, how to prepare for a crisis, how to respond when a crisis happens, and how to recover and learn from a crisis after it is over. We’ll also provide some perspective on where to learn more about crisis management.

Ultimate Guide to Crisis Management

Regulatory Compliance

In crisis management, adhering to legal considerations and regulations is paramount. This requires a deep understanding of both local and international regulatory frameworks relevant to your organization.

Being proficient in industry-specific legal requirements is crucial. Non-compliance can lead to substantial penalties and damaged reputation, impacting business continuity significantly.

Navigating Regulatory Landscapes

Achieving regulatory compliance begins with accurately comprehending what these laws mean for your specific sector.

Furthermore, consulting corporate security advisors who specialize in maneuvering through intricate regulatory landscapes could prove beneficial. They are equipped to pinpoint potential non-compliance areas and suggest effective strategies for remediation.

Maintaining Compliance During Crises

During crisis periods, maintaining adherence becomes more critical yet poses more significant challenges concurrently due to potentially disruptive events organizations must handle while ensuring their response plans comply with existing laws.

This calls for robust planning supported by comprehensive knowledge about various scenarios likely during a crisis situation.

As we proceed further into this discussion on crisis management, our next focus will shift towards data protection amidst crisis situations – another key aspect directly tied up with our digital age.

Data Protection

At Bryghtpath, we understand the importance of data protection during a crisis. A lapse in this area could lead to legal issues and massive damage to your reputation, not to mention significant financial losses.

Formulating Data Protection Policies

We take pride in developing robust policies that outline how confidential information will be secured during any disruption or disaster. This includes regular backups, encryption methods, access controls, and well-defined incident response plans.

Maintaining Compliance with Privacy Laws

Beyond safeguarding against cyber threats, our commitment extends towards ensuring compliance with privacy laws such as GDPR and CCPA. We are aware that non-compliance doesn’t just attract fines but also erodes customer trust due to reputational damage.

Educating Staff about Data Security Practices

The role employees play in maintaining data security is undeniable, hence regular training sessions form part of our strategy. We believe they need an understanding of their responsibilities regarding handling sensitive information, especially during a crisis situation. This involves awareness creation around phishing scams, which often spike up amidst uncertainty, and password management practices, among others.

As we delve into contractual obligations next, you’ll realize that these too have crucial roles when dealing with crisis situations.

Contractual Obligations

We at Bryghtpath understand the significance of contracts and their obligations. From vendor agreements to client engagements, each contract carries its own set of responsibilities that must be upheld even during a crisis.

Analyzing Current Contracts

The initial step is always an in-depth analysis of existing contracts. This includes understanding every term and condition specified, particularly those concerning disruptions or crisis situations.

This investigation should highlight any clauses triggering additional duties amidst a crisis, such as force majeure provisions or disaster recovery stipulations. Being aware beforehand enables you to plan effectively, ensuring compliance under all circumstances.

Persistent Contract Management

A consistent system for contract management is essential when dealing with unexpected events without violating legalities within various agreements.

With an effective identification strategy for potential issues before they arise, coupled with tools built specifically for navigating complex contractual landscapes, businesses can reduce risks associated with failing to meet their legal requirements due to unforeseen disruptions.

This brings us neatly onto our next topic: liability management – another key area when addressing corporate crisis scenarios.

Liability Management

The aftermath of a crisis event is often filled with uncertainty, but one thing remains certain: legal liabilities will arise. Whether they stem from negligence or failure to adhere to industry regulations, these potential liabilities need careful management.

Risk Mitigation Strategies

Mitigating risks effectively requires the development of robust strategies. This might involve implementing safety measures, crafting contingency plans, or securing appropriate insurance coverage – all crucial components of a good legal strategy.

Fulfilling Legal Obligations

In times of crisis response planning, it becomes vital for businesses’ survival to fulfill their contractual obligations and statutory requirements without violating attorney-client privilege. Neglecting to adhere to legal obligations may lead to dire repercussions, such as litigation and substantial penalties.

Maintaining Documentation

Diligent documentation forms another key aspect when managing liability during crisis situations. Such records serve as evidence demonstrating due diligence, which may prove beneficial if faced with any litigation post-crisis.

Precise record-keeping stands up under scrutiny, providing a solid defense against claims resulting from massive data breaches, among other modern crisis responses.

Insurance Coverage

A few months into my journey with Bryghtpath, I found myself in a discussion about the importance of insurance coverage in crisis management. It struck me then that understanding and leveraging our insurance policies is like having an invisible safety net under us as we walk on the tightrope of uncertainty.

The aim has always been to create an environment wherein businesses can operate without worrying about financial fallout due to unforeseen events.

Key Takeaway: 

Understanding and maximizing insurance coverage is like having an invisible safety net during crises. This involves not just purchasing adequate policies, but also maintaining compliance with their requirements. Moreover, effective crisis communication protocols are vital to manage stakeholder dialogue amidst chaos.

  • Crisis Communications

When the unexpected strikes, it’s not just about having a plan in place. It’s also crucial to have robust communication protocols that consider legal aspects such as confidentiality and disclosure requirements.

The Importance of Confidentiality

In crisis situations, ensuring the security of sensitive information becomes even more critical than usual. This could involve data related to your business operations or personal details pertaining to employees or clients. A misstep here can lead you into significant legal issues; hence safeguarding this confidential data is paramount.

Navigating Disclosure Requirements

Determining what needs disclosing during a crisis requires striking a balance between transparency obligations and potential risks associated with revealing too much information. Disclosure rules may vary based on industry regulations, contractual agreements, or insurance policies – making them complex terrain for any organization navigating through uncertain times.

Striking Balance Between Transparency And Legal Obligations

Finding equilibrium between being transparent enough without breaching legal duties isn’t straightforward; it demands careful planning well before possible disaster scenarios.

Best Practices In Crisis Communication

To successfully steer through intricate legal considerations tied up with crisis communications, having clear protocols set beforehand is vital. These should encompass identifying key spokespersons, establishing channels for internal and external communications, and preparing pre-approved messages.

Besides strictly complying with all relevant laws, regulations, and contractual obligations, it’s equally important that your company’s response showcases empathy, respect, and commitment towards resolving the issue at hand. This approach will help maintain trust among

In a crisis, robust communication protocols are key, balancing legal obligations with transparency. Safeguarding sensitive data is critical to avoid legal issues. Understanding disclosure rules can be complex but necessary for regulatory compliance. Effective planning and empathy in responses help maintain trust while navigating these intricate considerations.

Understanding crisis legal considerations is a critical part of your business’s survival strategy.

You’ve learned how to identify and mitigate potential legal risks associated with crises.

We’ve discussed the importance of regulatory compliance in all your crisis management plans.

Data protection has been highlighted as an essential component, ensuring confidentiality even during tumultuous times.

You now know that reviewing contractual obligations can prevent unforeseen complications during crises.

We also touched on liability management and insurance coverage – two significant aspects that can shield you from devastating financial losses.

Finally, we delved into crisis communications, emphasizing the need for transparency while respecting legal boundaries such as confidentiality and disclosure requirements.

Want to work with us or learn more about crisis management?

  • Our proprietary  Resiliency Diagnosis  process is the perfect way to advance your crisis management, business continuity, and crisis communications program. Our thorough standards-based review culminates in a full report, maturity model scoring, and a clear set of recommendations for improvement.
  • Our  Exercise in a Box  product contains 15 simple tabletop exercise scenarios that your business leaders can utilize for  crisis microsimulations  with minimal involvement from your team.
  • With our  Exercise in a Day ™️  product, you’ll get a comprehensive, ready-to-execute crisis tabletop exercise developed by our team of experts in just one day. Optionally, we’ll even facilitate the exercise and write an after-action report.
  • Our  Crisis Management  services help you rapidly implement and mature your program to ensure your organization is prepared for what lies ahead.
  • Our  Ultimate Guide to Crisis Managemen t contains everything you need to know about Crisis Management.
  • Our Free  Crisis Management 101 Introductory Course  may help you with an introduction to the world of crisis management – and help prepare your organization for the next major crisis.
  • Learn about our  Free Resources , including articles, a  resource library , white papers, reports,  free introductory courses , webinars, and more.
  • Set up an  initial call with us  to chat further about how we might be able to work together.

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About Bryan Strawser

Bryan Strawser is Founder, Principal, and Chief Executive at Bryghtpath LLC, a strategic advisory firm he founded in 2014. He has more than twenty-five years of experience in the areas of, business continuity, disaster recovery, crisis management, enterprise risk, intelligence, and crisis communications.

At Bryghtpath, Bryan leads a team of experts that offer strategic counsel and support to the world’s leading brands, public sector agencies, and nonprofit organizations to strategically navigate uncertainty and disruption.

Learn more about Bryan at this link .

Women in business continuity management

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