The excitement of starting your own business can be overwhelming that you forget to do proper legal work to insure against future accidents and litigations. Sometimes, it’s the disruptive idea you have that blinds you from carrying out background checks on the brand logo you’ve decided to use.
Sometimes too, a business owner could ignore or skip drawing up a contract to protect your intellectual property. Whatever the case, these mistakes may eventually land you into trouble and are capable of making you lose your business altogether. In this article, we’ll walk you through five actions you need to carry out to avoid being sued.
Know the Importance of Contracts
According to Linkilaw, 65% of startups fail due to co-founder conflicts arising from no previous legal framework on agreements. Often, if the legal battle isn’t arising from co-founders, it is from failure to set up Shareholders’ Agreement or Terms and Conditions Agreement.
As a startup, you need to ensure you have established comprehensive contracts with partners, directors and shareholders to avoid disputes. As your business grows, other types of contracts such as Employment Contracts will need to be explored. These need to be well thought out and genuine to help your business stand against any legal tussle that may arise in the future.
Get Intellectual Property Insurance
Thousands of UK businesses are embroiled in intellectual property (IP) disputes every year. The risk is that a claim made on an innovative idea you thought was your own could mean you losing that innovation to somebody else. So, as a startup you need to take pre-emptive measures to protect your business idea. This is considered best practice for every startup that wants to go far.
Properties like trademarks, designs and patents should be insured. You’ll also need a public liability insurance or professional indemnity insurance to protect your business from claims for compensation from an aggrieved client or the public
Obey Business Regulations
There are different types of business regulations established to guide business conduct. In the UK, the Department for Business Energy and Industrial Strategy is responsible for making sure businesses comply with the rules.
Regulations such as Employment Law, Consumer Rights and Competition Law are provided within the framework of the regulatory structure. You’ll need to understand how they apply so as to avoid exposing your business to unseen mishaps.
Taxes Are Important
The UK tax code may be long, but you still need to diligently study it to avoid the tax office ire. Get to know the value added tax, corporation tax and business rate, and ensure you comply by paying what your business is assessed. You can hire a tax lawyer to explain the nitty-gritty of taxation even before you venture out. Failure to pay your taxes is a big fraud that is capable of closing down your business.
Finally, on a light note, do not wait to see a lawyer when it’s too late. In fact, you need to involve a lawyer all through the stages of setting up your startup as they will have invaluable legal advice to give so your business doesn’t meet it’s dead end – at least not soon.