Keep it Legal: Why You Should Start Your Business Legally

Business can seem scary. Legally speaking, that is. But truthfully, legalities are nothing to play around with or skip out on. And that's why I am so thrilled for today's guest poster, Donata Kalnenaite. Donata is the powerhouse behind LegalDepartment.co, a monthly subscription service that helps protect startups and small businesses. And today, she's sharing why you need to start your business legally from the get go.

Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!
Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!

Starting your own business is very exciting. You have so much to give to the world and cannot wait to get started. You may be so thrilled that you may say to yourself “I’ll figure all of this LLC and contracts stuff out later once my business is up and running.” Stop right there! Not starting your business right could mean that it goes down the very next day. If you want your business to survive, you must start on the right foot and build a solid foundation.

What do we mean by starting your business right? Different experts define that in different ways. However, we, as attorneys, mean the following:

  • Forming a legal entity (e.g. Corporation);
  • Having an Operating Agreement or Bylaws;
  • Having a business license or permits if you need them;
  • Having contracts with your employees and independent contractors;
  • Having contracts with your clients; and
  • Having website contracts (Privacy Policy and Terms and Conditions).

How will having the above help you and your business?

  1. These protections will allow you to operate your business without the possibility of facing steep fines for non-compliance with the law. For example, if you collect personal information on your website, do not have a Privacy Policy and someone from California visits your website, you could be fined up to $2,500 per visit per California law. Such steep fines mean that you could lose your whole business in a matter of a few visits. A Privacy Policy is not expensive but can save  you a lot of money in the long run.
  2. These protections will help you reduce the likelihood of disputes with clients. Most disputes with clients start because there was some misunderstanding as to what the client was supposed to receive and for how much money. Contracts with clients lay out exactly what work you will be performing, what the deliverables are, what the client can expect from working with you and how much the client will have to pay. This means that your clients will be aware, from the very beginning, of all of the aspects of the deal. This will lessen the likelihood of disputes in the future and will even improve your relationships with your clients because your clients will know that you are transparent.
  3. These protections will lead to better relationships with your employees. Contracts with employees spell out exactly what the employee is supposed to do, what is expected of the employee and what rules govern the workplace. This means that employees will know their roles and responsibilities, therefore leading to a more productive and happier workplace. Furthermore, your employees will know that these rules apply to everyone and that everyone will be treated fairly, thus lessening the likelihood of discrimination claims.
  4. Having a legal entity will help protect your personal assets from the liabilities of your company. A legal entity acts as a shield and ensures that if someone wins a lawsuit against you, they cannot take your home or your car.
  5. These protections will protect your trade secrets, such as financial statements and clients lists. Employment contracts and independent contractor contracts ensure that employees know what information is confidential and how to protect such information from your competitors.

In conclusion, starting your business on the right footing has a lot more benefits than some paperwork filed in a forgotten cabinet. The protections that you establish now will work for the life of your company to ensure that you have success year after year.

Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!
Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!

Seriously. How amazing is Donata? But her awesomeness doesn't end there! Click the image above or right here to download her Pre-Launch Start Up Kit for free!

Donata Kalnenaite is the owner of LegalDepartment.co, an affordable monthly subscription service that helps protect startups and small businesses for only a fraction of the cost of in-house counsel. Donata writes custom contracts and loves educating the public and her clients on the benefits that legal protections have and breaks down complex legal concepts into easy to understand language. You can reach donata via her email, donata@legaldepartment.co.

Until next time, have a beautiful day, my friend!

Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!
Keep it Legal: Why You Should Start Your Business Legally. Be sure to download your free Pre Launch Start Up Kit!