You've decided you have what it takes to be an entrepreneur, and you've started your own business. Congratulations!
But, before you break out the champagne, you want to be sure your business will be a success. One surefire way to fail is to get your business caught up in a legal snafu. Here are the top ten tips to ensure your business is in compliance with legal requirements to help stave off potential lawsuits and other legal woes.
Set Up a Bookkeeping System
In order to know how your business is doing financially, you need a solid bookkeeping system. This will also be critical come tax time. If you're not the accounting type, look into hiring temporary bookkeeping help. Many bookkeepers charge around $25 - $40 per hour and can generally keep up with all your bookkeepers needs for an hour or two per week.
You can even hire virtual bookkeeping help. Quickbooks Online, for example, allows you to assign multiple users to your account. You could be in New York and your bookkeeper could be in LA, and you'd still get expert help.
File the Requisite Paperwork With the State
If you plan to operate as a sole proprietorship, you won't have to do anything. However, being a sole proprietor leaves you open to personal liability. To protect your personal assets, you may wish to form a Limited Liability Company. In order to form your LLC, you will need to file the requisite paperwork with your Secretary of State, and publish your intent to incorporate in an approved newspaper. The cost to establish your LLC ranges from $250 if you do it yourself to $500 or more if you hire legal help.
Obtain All Necessary Licenses and Permits
Depending on your profession, you may need a license to operate business. In order to protect yourself form potential liability stemming from negligence, make sure to obtain all necessary licenses and permits to necessary for your profession. Make sure to keep them current, and adhere to all continuing education requirements for your profession.
Establish a Marketing Strategy
You can offer the best products and the ultimate customer service in the world, but if no one knows about it, your business won't last long. Marketing makes up a huge part of any business' budget. Set a fixed amount monthly for this important task. Be sure to include a tracking system so you know which of your marketing efforts has offered the biggest return on your investment.
Establish Guidelines for Contracts
Whether contracting with employees or clients directly, it is vital that you have written contracts outlining things such as the scope of work and price estimates. For contracts you use regularly in the course of business, hire an attorney who specializes in the area to review the documentation to make sure it is complete. While it may cost a bit up front, it can save you a great deal of money in the long run by protecting you from breach of contract suits.
Establish Firm Guidelines for Account Receivables
In order to succeed, your business needs to be paid. You'll want to immediately establish a way to collect funds from customers. Think carefully as to whether you wish to be paid up front for your work or in a series of installments. Investing in an effortless invoicing system will help you send professionally designed reminders to pay you for your work.
Stay Compliant With All Tax Obligations
Nothing can damage your long-term business success than hassles with the IRS. Make sure to pay all quarterly estimated or payroll taxes on time to avoid costly penalties and interest. The IRS has been known to levy delinquent taxpayers and even force them to close their businesses down, so staying on the right side of your tax obligations is critical to your long-term success.
Understand Employees, Independent Contractors, and Their Rights
If your business has employees or utilizes independent contractors, you'll want to be aware of the laws surrounding each. By law, businesses cannot govern, for example, when independent contractors perform their work or where they perform it. Employees have a great range of legal protection by law, including whether or not you as an employer must offer certain benefits.
Avoid Litigation with Sound Governing Policies and Employee HandbookIt is critical to outline your business' expectations of employees. In order to avoid potentially costly litigation, outline your policies regarding issues such as sexual harassment in your employee handbook. Make sure to have all employees attend requisite training on the issue so that it is understood what behavior is inappropriate.
Protect Your Business' Property with Security Protocols
Depending upon your profession, you may have access to sensitive client and employee data. By law this must be safeguarded. For paper records, be sure to keep any documents containing information such as Social Security numbers in locked cabinet. Make sure your company computer's anti-virus software is also up-to-date to safeguarded personally identifiable information form identity thieves.
Running a business can be the most rewarding endeavor you will ever undertake. Safeguard yourself legally, and you'll have taken the first step on the path to success.
After graduating from Penn State with degrees in Marketing and PR, Sarah moved to Harrisburg to start her career as a Digital Media Specialist and a writer. She later founded Punched Clocks, a site dedicated to helping young professionals navigate the work world and find happiness and success in their careers.
