Finally, you've decided to make your dream a reality by launching your own startup? Congrats!
Beyond the celebrations, there’s a whole lot of work to be done. In order to ensure that your small business will become a successful and relevant one, there’s some necessary groundwork that you’ll need to complete.
Knowing how to make a small business legal plan to meet your needs will allow you to successfully launch your business, increase your sales as well as reduce any liability.
When getting your small business started, you’ll have to go through several legal hoops. As your business grows, many more legal needs will also surface. Continue reading to learn how to make a small business legal plan.
1. Choose Your Business Type
By choosing the type of business that you want to establish, you’ll also have an idea of the taxes that you’ll file and the legal protections associated with that business. These also determine your business’ liability.
It’s important to get your business incorporated as this establishes it legally. You should also consider seeking legal advice from a lawyer in order to determine whether a partnership, sole proprietorship, s-corporation or LLC would be better suited for your business.
Choosing the right type of business is a crucial first step in launching your business successfully.
2. Consider Getting a Business Prenup
Your business prenup is your buy-sell agreement. If you’re going to establish a partnership, it’s good to get one to protect stakeholders from events that could cause turmoil in the company.
A prenup puts safeguards in place and specifies how to protect the business and all partners should someone decide to leave the company. Your buy-sell agreement will clearly outline how you can purchase a stakeholder’s shares in the business, in the event of their death or retirement. In essence, it outlines who can buy a partner’s remaining shares, in what instances they can do so and the price they will need to pay.
3. Outline Your Business’ Structure
By using corporate bylaws you’ll be able to clearly define your business’s structure. These ensure that you meet your state’s requirements while creating the structure for your business that defines its operation.
These bylaws will decide the frequency of meetings, your board of directors and their functions. It will also determine stock distribution.
4. How to Make a Small Business Plan
Create a plan that outlines the functions of your business and its expected growth. Include your company’s objectives, business strategies, and forecast projections. This is your executive summary.
Next, clearly define your target audience and include any analytics on that demographic. Zero in on your business structure, your marketing strategies and any other plans to win and retain customers.
Also, highlight your product or service, its value to your customers and why it outshines your competitors’ products. Throw in a section on your finances in order to attract investors and funding if needed.
You must decide how you will generate leads. For example, a new law practice will need legal leads, they may choose to get these legal leads from a lead generation company.
Whatever the industry, there are usually company's dedicated to finding you leads in your niche. This ensures that you can get your business up and running quickly.
5. Draft Non-Disclosure Agreements
Use non-disclosure agreements to bind your employees, contractors, and partners to confidentiality. This way you can keep your business ideas a secret legally.
While non-disclosures are good at protecting your trade secrets they can also prove helpful in safeguarding your staff and partners’ personal information. With your non-disclosures, you’re defining what should remain private. You’re also outlining its purpose and binding those asked to sign it to secrecy.
6. Design an Employee Agreement Form
Although you’re starting a small business you might still need an employee or two. They’ll help to promote your products, grow your business and represent your brand.
By defining the terms and conditions associated with the job you're allowing each employee's role to become more defined. Your agreement form should outline the following.
- Expectations
- Benefits
- Pay
- Your business’s policies
- Bonuses
- The rights and duties of your employee
7. Choose a Location for Your Business
Location can make you or break you. Ensure that you keep your business’s needs at the forefront when choosing your location. Also, consider space and how it could become handy as your business grows. Don’t forget to think about storage and amenities for your customers such as parking.
Once you think that you’ve identified your ideal property, go ahead and look into a commercial real estate lease. Most of the terms are similar to renting an apartment but you might still want to review it with a real estate lawyer.
8. Get Your Licenses and Permits
Ensure that you’re doing everything that is required for your business to operate legally. A good way is to apply for the license and permits that you’ll need for your line of business.
If a federal agency regulates your business then you’ll need to get federal licenses and permits. The associated fees and requirements will be determined by the nature of your business and the licensing authority.
You might also need to obtain state licenses and permits. Based on your type of business, the state will decide the fees and requirements. Ensure that you check your state’s website to find out all the necessary details.
All Set to Launch
When starting your small business there are certain factors to consider with regards to the law. Doing the groundwork to ensure that each of these factors is successfully met will lead to a smooth launch of your business with legal compliance.
Knowing how to make a small business legal plan ensures that you cover all the bases. A small business legal plan also ensures that you follow all the necessary commitments and requirements needed to start your business.
If you would like more business tips, please visit the "startups" section of our website. There you will find all the tips you need to launch you on your journey towards success. Also visit the Law section of our website for more legal business advice and insight.
