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Five Legal Mistakes every Entrepreneur must avoid making

Business law is the law that governs commerce and business in the nation. The law deals with both, private and public enterprises. It regulates corporate contracts, manufacture, and sales of consumer goods and hiring practices. This article will specify a few legal hassles to avoid concerning Corporate Law :

  1. Do not delay Incorporation

There are numerous points of interest to set up a company or LLC, and for some entrepreneurs, this is the initial phase in opening their venture. However, there are others who don’t consider the benefits of joining until it’s past the point of no return. For instance, if your business is incorporated, your personal assets have an insurance in the occasion that your organization is sued by a creditor or customer. Incorporate at the right time exploit this security.

 

  1. Do not sideline the importance of NDA

Regardless of whether you do the greater part of the work yourself, in the end, you’ll most likely contract some assistance or subcontract some work. Ensure you’re prepared in advance by arranging for standard contracts early. These contracts must express the fundamental terms of the job and the payment details. Contracts should likewise assure the commitment of representatives in maintaining the privacy of your business details. Therefore, ensure you incorporate a non-disclosure agreement to guarantee individuals working with your firm are aware that all trade secrets or business plans are secured data.

  1. Ensure you’re a licensed corporation

To lawfully practice various occupations or operate most sorts of organizations, proprietors are required to obtain the local, state or federal licensure according to whichever is considered appropriate. Zoning licenses may likewise apply, particularly if you meet the customers on location. Most of the time, business licenses are moderately economical. In any case, running a business without a permit can be costly as there might be expensive fines.

Corporation

  1. EIN (Employer Identification Number )

It’s a smart thought to get an EIN from the Internal Revenue Service. An EIN works like a Social Security number for your business. It’s required under numerous conditions, for instance, if your business is an incorporation or a partnership, or in case you have representatives/employees. Even if you are a sole proprietor, an EIN can be a smart choice since you can utilize it to shield your own Social Security number, which you may somehow or another need to uncover for installment purposes.

  1. Safeguard your identity

A logo is something much more than just a graphic image. It’s a one of a kind representation of your organization’s character. As your business develops, your logo grows in value because it represents the company’s promise to its customers and clients. Ensure the value you built for your organization remains with you and not with somebody else. For this, it is essential to secure your logo so that a rival does not utilize it to pick up the business that you earned.

The Need For a Business License

Starting a new venture is an extremely exciting and nail-biting experience. In such a scenario it is quite easy to forget some important activities such as obtaining a license for the formal operations of the business. Licenses and permits are compulsory, and before you can legitimately start to work your business, you need every one of its licenses and permits to be on point.

Where to procure a Business License?

Business licenses, tax registrations, and permits, are issued and supervised by all levels of government, local, state, and federal, also county and municipal governments. In some cases, you are also required to acquire permits on every level of government.

In the United States, there are over 40,000 individual licensing jurisdictions and each one has its’ own set of licensing requirements.

Why do you require a Business License?

  1. Security

Guaranteeing your organization is appropriately licensed helps assure yourself, your workers and your clients. Having the right permit will guarantee your personal assets are secure in the event of a lawsuit. This works the other way around as well as though you are by and by at risk for harming another, your organization’s accounts won’t be accessible in the settlement. A licensed business is a separate entity from the owner, which means your organization’s taxes aren’t recorded with your own. This makes it far less demanding to report income and also organizations losses.

Security

  1. Assurance for your employees and customers

A license will likewise guarantee your employees are secured in the event that they are harmed and in addition ensure your clients as well. For example, if you sell food products or products that engage in direct contact with the human body, you will be required to have a particular permit and in addition, be required to pass a yearly investigation. This secures both you and your clients in the event that any occurrences take place.

  1. Privacy

If you acquire a permit for your business, you are guaranteeing the safety and security of your own data. This incorporates everything from your address to your accounts as they won’t be related to the business and will ensure you hold a level of individual protection.

  1. Trust and Goodwill

Clients will all the more promptly trust an organization this is licensed. You may or may not require a permit for the field of business you are involved in, yet getting one brings security. A permit demonstrates your organization is reliable and stable and that you are devoted to your organization’s prosperity.

Trust

  1. Good for the economy

With such a significant number of new organizations coming up each day, registering your organization formalizes the economy. It guarantees the business sector is flourishing, and in addition solid and protected. Small ventures can also just gain financing or assurance by the law once they are enlisted and authorized.

Strategies for small ventures to protect against white-collar crimes

When people think of white-collar crimes, they think about the most famous white-collar criminals which include people like; Bernie Madoff, Charles Ponzi or Martha Stewart. The white-collar crimes generally involve cheating, lying and stealing in a business setting. Here are some strategies for small time business against white collar crimes:

 

  1. Crimes by Employees of the Company-

Adding to the crimes done by public officials, sometimes small businesses suffer loses by the crimes done by their employees. Due to the limited resources, the small businesses have only one bookkeeper who is the signatory of checks and prepares the financial and accounting statements. So, having one person to have that much power over the business can expose the company to potential embezzlement, money laundering ,and tax evasion charges. To protect this type of crime the following strategies can be used:

  • Company checks should require two signatures, in this way more than one individual is aware of all the company’s disbursement.
  • Get an independent accountant to perform an audit on company financials. It need not be a certified audit and not to be done annually, but a biannual audit is a good idea.
  1. Crimes by Vendors Who Contract with the Company-

Not only crimes by employees but vendors also commit white-collar crimes in small businesses. A few scenarios of this crime are: A firm purchased a bulk order of pens from a company giving the pen at a lower price but later on after the delivery the company realizes the pens only have half ink. So, to prevent these crimes, the company can do the following:

  • Bring in fraud awareness programs for employees.
  • Develop a policy whereby the board approval is necessary before making the purchases, so that more company representatives are, asking questions about the new vendor.
  • Make a policy to whereby all new vendors are investigated before getting into a contract.

Environmental crime

 

  1. Strict Liability for Environmental Crimes-

Being a business owner, you are held liable for the crimes of another individual without the knowledge or intention of the crime. For instance, if a company X acquires a land and later finds out about the hazardous material underground, company X is responsible to clean it up. Now if company X hires company Z to clean the area and they throw it into the lake and disappears, then company X is exposed to criminal prosecution. So, make sure to check the companies before engaging for business.

  1. Be Truthful About the firm’s Finances-

During the times of recession, the small business has cash-flow problems, money is entering, clients have delayed payments due to their financial issues. So small business seeks loans and while presenting the finances of the firm, to stretch the truth they show fraudulent representation which is called cooking the books. So, make sure while making representations about the firm do not stretch the truth.

How to fire an employee

If you have done all the help for your problematic employee but nothing has changed. Companies rely on teamwork to be productive and successful, good managers will do all they can to guide and motivate the employees but if the employee is not improving, then it is time to let go of him/her. Here are some tips on how to fire an employee:

  1. Documentation of Everything-

As soon as you feel that you want to fire a member of your team, then start documenting him/her and also compile all the communication with and about the employee. It also includes email exchanges, performance evaluations, and coaching session of the employee.

Document

  1. Communicating Your Concerns-

If there is an employee who is in danger of losing his/her job, should be told as much and also given the opportunity to adjust his/her behavior or performance in the company. The employee must be informed that there is a problem the moment it is seen in the firm. Meet the team member personally and make sure to communicate your concerns. Make sure to list specific issues and to outline the improvements that are expected. Discussing the specific issues will keep the conversation on the topic and also provides a way to measure the changes in the employee’s performance after the meeting.

  1. Protecting Your Business-

If you feel you have given the employee all the chances to improve and have not seen any improvements or appropriate changes, then it is time to let go of the employee. Before taking it further make sure that the reason for firing does not violate the state or federal laws. Bring together all the documentation mentioning the employee’s poor performance which includes details on the reason behind firing the employee and also the steps taken to coach the employee. The documentation is not be provided to the employee but should be kept to defend your decision to fire him/her. Whatever may be your relationship with the employee, there is no way to predict how they will react to being fired. To keep the business safe make sure that you do not leave any room for accusations of unfair dismissal.

Protect

  1. When You’re Ready to tell-

Once you are ready with all the necessary documents, set a time to meet with the employee. Waiting to tell the employee at the end of the day or week is common but it is best to tell the employee as soon as you are ready. During me the meeting is direct and make sure to focus on the facts, if you have done everything to help then the terminations shouldn’t be a surprise to the employee. A job termination is an emotional experience for all involved in a firm, so by keeping the conversation short and on point can avoid it to become overly emotional.