5 Ways for Startups to Avoid Business Law Potholes

By: Brandon Howl

A startup may think that it is riding high on a tidal wave of innovation. A small business has a sublime idea to satisfy customers. A family-run company wants to continue the tradition of providing consumers with top-notch service. These are reasons we go into business, isn't it?

Unfortunately, stellar products, customer satisfaction and quality service are lower on the totem pole when you're dealing with business law. That's right. Business law is a crucial factor.

Canada's business laws, rules and regulations are immense. The amount of rules that are currently in place is costing businesses, large and small, billions of dollars per year. This is something that corporations can afford, but smaller businesses can't, and it hinders their growth.

It is now more important than ever that startups and small businesses abide by the various business laws. Otherwise, your private enterprise will be in disarray, and you will have many visits from bureaucrats and perhaps even lawsuits from competitors and/or customers.

This is why it is important to have a legal expert who specializes in business law on your team. They will provide you with the necessary guidance to prevent yourself from getting into legal trouble down the line.

Here are five ways for startups to avoid business law potholes:

Everything Must be in Writing

The best way to protect yourself in every single type of situation is to have everything in writing. Everything from the fine print to signatures, all sorts of agreements and business transactions should be in writing. This is the ultimate defense against accusations of wrongdoing.

Maintain Excellent Recordkeeping

Similar to having everything in writing, maintaining excellent recordkeeping is another way to shield yourself from lawsuits, complaints and allegations of financial misconduct.

Filing cabinets for your credit card receipts, a digital database for your contracts or folders of agreements, records can give your company an advantage over your competitors and those who want to be mischievous.

Talented Ladies Club has some tips on keeping record for your business, if you are looking for more information.

Don't be Fast & Loose in the Language

When you're a small business then the chances are you will do business with friends and family members. These kinds of intimate relationships may cloud your judgment and the other party may not want to actually enter into detailed agreements. This is dangerous for yourseld and for your company, even if you have known your uncle for 30 years.

A partnership agreement with a best friend or a cousin, for instance, should consist of each person's time and resources; how ownership will be redistributed should the other party exit the business; and the share of ownership be relinquished in the event of a certain situation.

It is imperative that both parties thoroughly review the contract, discuss an array of scenarios and be specific in the language used. Neither party should ever be fast and loose in the language.

Protect Your Intellectual Property (IP)

Intellectual property, or IP, has become critical for all sorts of businesses since the dawning of commerce. If you have produced unique software, created an original trademark or established an unseen product then filing for an IP is vital to the success of your company.

Moving forward, you should concentrate on:

  • Copyright notices on all written materials.
  • Confidentiality agreements with partners and employees.
  • Trademark registration for things like company logos and product names.
  • Digital privacy, locked doors and additional security.

You may think that perhaps you're beeing overcautious. This is nonsense. You can never be too careful in your IP endeavours.

Remember, Legal Ignorance is Not an Excuse

Not everyone is an expert of law. If we did then there would be no use for attorneys. However, ignorance of the law is never an excuse or a defense. Similar to accounting or marketing, you need to acquaint yourself with business law, whether it's employment contracts, local regulations, IP or accounting practices. You need a better understanding of business law.

Business law is a complicated business, which is why you should retain a business lawyer for their insights. For those of you looking for a business lawyer in Pickering, Ontario, you may be interested in the legal services offered by Walker Head Lawyers.

You are an expert in your own field and you want to grow your company. You can't waste precious resources on intricate matters like business law. Otherwise, you'll lose essential time and energy, which can be better spent on the growth of your private firm.