Starting a business can be both exciting and stressful. But, with proper planning and legal guidance, the process can be smooth and problem free. Many people aspire to start their own business but succeeding in the commercial marketplace is easier said than done. Companies led by inexperienced people unfamiliar with the legal requirements they need to fulfill are particularly susceptible to failure. Nevertheless, many business owners jump into the competitive marketplace without doing enough research when it comes to covering their legal bases.
Top Seven Legal Considerations When Starting Up
This blog post seeks to give you an insight into some of the key steps and legal issues you have to consider before starting your business. Here are our top seven legal considerations when starting your own business:
Structure of Your Business
One of the many important decisions you must make when starting a business is to decide on the legal status or structure of your company. Your chosen legal structure will affect how you run your business. It will also have implications on how you pay your taxes and keep your accounts.
The most widely used business legal structures are:
- Sole proprietorship
- Limited Liability Company (LLC)
- Branch Office of a Foreign Company
To decide on which status is best for your new business, consider all liability issues that may be associated with your company. Think about which type of tax structure will be best for your business as well.
Protection of Your Personal and Intellectual Assets
The most important thing to consider when launching your own business is how you intend to protect your personal assets. No budding business owner wants to think about failure, but the truth of the matter is that many new companies struggle to earn a profit and collapse. Even those that are successful might find themselves the victim of an unjust lawsuit that eats up time, money, and energy.
Intellectual property is one of the main assets that business owners fail to protect. Intellectual property can include things like:
- your trademark
- your brand
- domain name
- recipes or products you’ve created
Business owners frequently underestimate the value of their intellectual property, but it can be one of your biggest assets. Other ways to protect yourself include having properly drafted terms and conditions. These are particularly useful when it comes to payment terms because every business owner needs to get paid.
Check All Aspects of Your Business Name
Picking a name is not just about what sounds or looks the best, but rather, what is feasible and most of all, what is legal. Before choosing your name, you want to make sure it is available and not being used or trademarked by another company. Perform a trademark search of the name with the UAE Patent & Trademark Office to make sure you are not infringing on someone else’s trademark, which could lead to a lawsuit.
There are other important considerations when naming your business too. If you find out that the perfect name’s URL (web address) is already taken by someone else, you might have to buy that domain name for a high price, if it is even for sale, which is not likely feasible for a new business. So, when you are picking a name, it’s advisable to use one that has an available domain name.
If you intend to have employees, you need to consider the conditions of employment that you will offer to your employees. There are certain minimum standards in the UAE that apply to all employees – such as minimum wage – and certain awards that apply in particular industries that provide a further ‘safety net’ for employees. You should familiarize yourself with these standards and your obligations to make sure you are operating lawfully.
Many business owners provide conditions above the minimum required by law and they enter into employment contracts with their employees to reflect the arrangement. It is highly recommended that you have formal employment agreements in place with your employees, not only so the rights and obligations of each party are clearly documented, but also for the event of a dispute with an employee.
Obtaining the Required Licenses
You will need several types of licenses or permits before you open your business. The number of licenses your business will require will depend on the kind of establishment you want it to be. At the very least, you will need a business license, trading license, and sales tax permit.
If you plan to open a restaurant, cafe, or catering company, you will have to register with the local governing body for food standards and health and safety oversight. If you plan to provide entertainment in your establishment, you will also need to get the relevant permits for music and entertainment. It is best to do some additional research and contact company formation experts to learn more about the specific licenses you will need to legally run your business.
Relevant Health and Safety Laws
As a business owner, you will have to assume several important health and safety responsibilities. These include ensuring that your employees work in a safe, healthy environment. You also have the duty to look after the well-being of anyone including clients and visitors inside, outside, and near your business premises.
It is highly recommended that you carry out a risk assessment to help identify the risks posed to individuals by your business activities. You then have to mitigate these risks or hazards as much as possible. This may include changing some standard operating procedures and removing some fixtures to ensure that employees and members of the public are safe.
Find a Lawyer
Most people think they can form their company by themselves, and they can, but these people often do not understand the implications of making a decision one way or another. That’s why one of the best pieces of advice when starting a business is to hire a lawyer. The reasons are numerous. Every business needs a good lawyer to call upon when things inevitably go wrong. In this day and age, it’s only a matter of time until you’re dealing with a lawsuit, and when the subpoenas arrive, you’re going to want solid legal expertise to rely on. Thoroughly vet the lawyers in your area and don’t be afraid to ask them why they’re the best choice for your business.
Invest plenty of time, energy, and money in finding the right legal experts to help protect your business, and your new company will be up and running in no time. It’s best if you do things right the first time and hire a lawyer because it’s important for your startup to have adequate legal protection.
We Are Here for You
Starting a business can be a daunting task. Make sure you focus on what you do best, which is the business. Let the lawyers deal with the law. But make sure not to overlook the importance of establishing your company correctly from the start. It will pay dividends down the road. Knowing which laws apply to your new business is something that is also important if you want to open a company overseas. If you want to expand globally, make it a priority to consult a trusted consultancy firm, such as Riz and Mona Consultancy, to guide you every legal step of the way.