Launching a business requires a firm knowledge of the basics of law. And if you think that the importance of law stops there, then you are mistaken. Many aspects of business, such as taxation, insurance for the employees, intellectual property, and company formation are all within the state’s law.
Inadequate knowledge of law may open the risks of misconduct and violation, which can be costly and even fatal to the company’s reputation. But here, you can find the summed-up version of the basics of law for business. Read this article through, and the knowledge will protect you.
On Choosing the Entity Structure
There are many types of business, such as Public Limited Company (PLC), Private Company Limited by Shares (LTD), Unlimited Company (Unltd), and Limited Liability Partnership (LLP). The government acknowledges those entities by granting them the articles of incorporation or corporate charter. The documents serve as a legal license for a business to take place in a country. It will receive all the legal protection and responsibility that have been determined by the state law.
The best way to work on the corporate charter is by working with a corporate law firm. You tell them how you are going to do your business, which includes the funding, profit share, and employment. Then the attorney will give his/her best knowledge of what corporate structure fits the best with your plan. Corporate attorneys are also expert in taxation so that they can help you to improve your financial plan further.
On the Financing
Corporate funding and shares are all predetermined during the establishment stage. What the corporate attorney does at that stage is to design:
- The term sheet
- Stock purchase agreement
- Subscription terms
- Nondisclosure agreement for investors
- Purchase agreement.
If all are carefully written, in theory, the company will be legally strong. But faults grow exponentially over time. Agreements need audit and renewal. Some points may get irrelevant in the future. And some terms may not be compatible with the company’s structure anymore. In those cases, you have no one to rely on except the corporate law firms.
On the Employment Documents
The Human Resources Department (HRD) of a company is the one in charge of issuing the employment documents. The agreements must meet the standards of the local employment law. And this matter may require a lawyer’s supervision.
Salary structures, compensation, benefits, off time, exit policies and performance parameter are all subjects that the employment documents must cover. A competent HRD officer possesses the knowledge of the rules that must not be violated. And that is why you may, or you may not need assistance from a lawyer.
You need to realize that you must control the efficiency of the employment documents even after they have been issued. Disgruntling employees usually appear when the exit policy is implemented. Take one case and try to conduct everything by the book, and see whether things go smoothly. If you encounter trouble, and your suitor finds a flaw in your system, then you must fix it immediately. Otherwise, the dispute may inspire other workers to grow unrest even if the company treats them fairly.
On the Partnership
Making deals between companies need a legal advisor. But before that, you can minimize the cost by being extra careful in choosing a partner. First, always check whether your potential client is legally registered.
Today’s technology has facilitated us with search engines that can help us to find many kinds of information, including business entity. For instance, if you are a businessperson from California, you can try California Secretary Of State Business Search to profile your potential colleague.
Second, consult your decision with the company’s financial advisor. Advisors have a wide perspective on an issue because their job is to keep updated with the current news. A good advisor evaluates the situation based on the real fact. If a company is suspected to be corrupted and dying from the inside, a good advisor will not glorify the condition.…[Continue reading]