Legal Issues

There are several legal issues that can arise when starting a business. Failing to comply with federal and state regulations concerning building codes and how to structure a business could also result in fines. Therefore, it is critical that a new business owner have adequate legal support. The following are areas of business where legal issues could arise:

1. Form of Organization and Business Name-A lawyer can help you determine the form of organization that is best for your business and assist you with the necessary paperwork, whether you're just starting your business or have been in business for a while. In addition to sole proprietorships, corporations and partnerships, most states permit limited liability corporations. The form of organization you choose may affect many aspects of your business, including estate planning, tax planning and liability in litigation. A lawyer can also help you ensure that your business name is preserved for your use only.

2. Buildings and Property- As a small business owner, you need to know the building codes in the district where your business will be operating. This will ensure that there are no building code violations and that there are no structural issues or other problems that may invite fines.

3. Licensing and Insurance-It is important that all relevant and necessary licenses pertinent to the business be obtained. The correct way to apply for any license is through your state’s Business License division. It is strongly recommended that your business be insured (in fact, this is often required), preferably with a reputable insurance company. To receive more information on government regulations pertaining to licenses, permits, registrations etc. for a specific line of business, contact trade associations, business colleagues and experienced consultants.

4. Review of Lease –Small business owners often start their business from leased premises rather than incurring the major capital investment of buying or constructing a new building. However, leases represent one of small business owners’ largest expenses, and generally reflect a long-term commitment. As such, a business owners’ signed lease agreement is a critical legal document. Leases can vary from a simple one-page agreement to a lengthy complex document, depending on the space you are renting (e.g. mall space vs.. separate building). While your realtor can assist you in understanding the costs and basic terms of a lease, it is strongly recommended to have a lawyer explain the legal consequences before you sign any lease.

It is best to hire an attorney to go through all documentation, plans and papers related to the legal aspects of starting your own business. It also strongly recommended that you consult with an attorney if you have any questions regarding review of lease, building codes, and what form of organization best fits your business. This will help you to comply with any legal requirements and ensure that your business is protected from lawsuits and other legal complications.