Operating a business can be challenging and can require significant knowledge of how to operate within the particular industry as well as financial aspects of the company. Another important aspect of running a business is understanding the legal aspects of the business. Being aware of the applicable law will help an entrepreneur make the correct decisions necessary to avoid future problems as well as maximize potential success.
Creating a Business Entity
One of the first things an entrepreneur needs to do to start a business is to create a business entity. However, there are many types of business entities a businessperson can choose to create. It is important to choose the correct type of business entity which will match the specific situation and goals of a proposed business venture.
Some common types of business entities include sole proprietorships, corporations, partnerships and limited liability companies. Sole proprietorships are commonly used when the business model is relatively simple and there is only one owner. Partnerships are useful for some business models with multiple owners. Limited liability companies help to insulate owners from many potential legal pitfalls, however, will be more costly and require more paperwork. It may be necessary to consult with any business transaction law services manchester nh to assess one’s specific situation.
Understanding Business Contracts
All business transactions are essentially contracting in one form or another. Even simply selling a coffee at a cafe is an implied legal contract between the customer and the cafe business entity. Therefore, having a thorough understanding of contract law is essential. This will include knowledge of the applicable statutes and case law. Many times, understanding how legal contracts work is necessary in resolving many types of business disputes.
At some point in the growth of a business it may become necessary to hire employees in order to continue operating the company and expanding the business. However, taking on workers entails various legal implications of which a business owner should be aware. For instance, deciding on whether to classify a worker as an employee or a contractor will require significant understanding of labor laws in New Hampshire. Employers may be required to pay for workers’ compensation insurance in many instances. Also, there may be potential legal disputes between the employer and employee which may need to be resolved.
Selling Equity to Investors
Besides hiring workers, another way a business can expand its operations is through selling equity to investors. This means investors pay money in order to own a portion of the business in hopes of reaping a share of the profits. In this way, the business is able to gain more resources necessary to expand the business. However, selling equity to investors will require preparation of necessary legal documents as well as filing with the proper legal authorities. Making a mistake in this process can cause serious issues in the future. Therefore, obtaining the advice of a legal professional can be invaluable.
Hiring a Legal Professional
It is clear that understanding applicable laws can be useful in every stage of starting and operating a business. Legal implications of business decisions can make the difference between success and failure for many companies. Failure to take this into consideration can result in serious consequences. Hiring a business attorney can help avoid many problems for an entrepreneur.