A Sampling of Business Law Tips

By : Gerard Simings
Mention legal regulations to a businessperson and you will probably see their eyes glaze over. One can hardly blame them given the complexities of the subject. That being said, here are a few legal nuggets you should know.

1. NDA Protection – If you are going to provide important business information to a third party, make sure to get an NDA. An NDA is a non-disclosure agreement.

2. Legality of NCA – Many businesses ask their employees to sign non-compete agreements, also known as NCAs. Keep in mind they are illegal in some states!

3. Written Agreement Jurisdiction – When negotiating a contract, make sure to look at the jurisdiction clause. You want it to be in your town or city. Otherwise, you may have to travel across the country to defend yourself in a lawsuit.

4. Business and Friends – When starting a business, there is a tendency to get friends involved. Generally, this is a bad idea. Different views can lead to the end of friendships.

5. Enthusiastic Legal Representation – Your attorney has a duty to enthusiastically represent you, but not make final decisions on your behalf. He or she will make recommendations, but the final decision is yours.

6. Defining Shareholders – The owner of a corporation is called a shareholder. The shareholder’s interest is the number of shares he or she owns compared to the total shares issued.

7. Avoid General Partnerships – Never form a general partnership unless you have to. This business form leaves all partners open to joint and several liability. This means everyone is entirely responsible for the debts of the business.

8. Corporate Tax Designations – Once you have incorporated a business, you must determine the tax status of the business. If you do nothing, it is automatically taxed as a C-corporation. Alternatively, you can file for a S designation.

9. Going Ecommerce? – Most startups don’t think about going online before opening a brick and mortar office or shop. If you can get the hang of web design, it is much cheaper to start online.

10. The First LLC – The first limited liability company came to us from Wyoming. To attract tax revenues, Wyoming passed a law allowing them in the late 70s.

The law is a vast and complex subject. A few tips are not going to get you by. If you find yourself in a complex situation, seek out the advice of a good attorney.

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