COMPANY FORMATION, COMPLIANCE, AND HURDLES ENTREPRENEURS FACE WHILE SETTING UP COMPANIES

COMPANY FORMATION, COMPLIANCE, AND HURDLES ENTREPRENEURS FACE WHILE SETTING UP COMPANIES The thought of starting a business is all about rainbows and unicorns but the reality is the quite opposite of it. Being an entrepreneur is a powerful feeling that most people want to feel. Not only that, being your boss is a pretty ride full of emotions. That ride is absolutely exciting and scary. If you have the skills and enough experience, you are ready for this ride. So, if you are planning to start your own business, you need to do it the right way. Many amateur entrepreneurs face difficulties legally, financially, and emotionally. You need to make your every move carefully from the very start. And it all starts with fulfilling the legal requirements that are important for every business. Here are a few things that need to be taken care of legally when you plan to start a business: 1. Protection of your assets: This is the first thing that you should do as soon as you start filing for your company. You must protect your company as well as your assets. This is the most important thing to do when you start with a company plan, yet most entrepreneurs miss out on this. This is because, when we start or plan a business we don’t think about the failures, we only plan for the success with huge agendas and even the successful

entrepreneurs end up eaten by lawsuits sometimes for minor mistakes. We must prepare ourselves for the downs in the future by protecting our assets. You need to form an LLC (Limited Liability Company) so you don’t end up losing your assets and finances. It is a lengthy procedure that needs to be done by the books, so take as much time you need to do the research. 2. Check if there’s a need to publicize your company: Making your public like in a newspaper, for example, is a rule in some places while forming an entity like LLC (Limited Liability Company). This rule depends on which country and state you live in. Like for instance, New York is one of the states that comes under this rule. That is why the research is an essential thing to follow while forming an LLC. If you miss out on any rules, you may face fines or disqualification from the authorities. 3. Insuring your workers and your business: It is a legal requirement in some countries to ensure the employees when the company hits a certain number of workers. Many entrepreneurs of small businesses don’t see this as an important requirement just to cut down the cost, without realizing the fact of not going by the law always backfires. You may fool the law when your business is keeping it low, but once your business starts growing you may face some serious consequences. To avoid that read all the information regarding the insurance of the employees and laws about it in your state. Ensuring your workers is equally important as ensuring your business by filling general liability insurance. It is a kind of insurance that saves your business from heavy losses if a customer or client files a lawsuit. Depending on the nature of your business, whether your business requires this kind of insurance or not. Do a lot of research and even if you still are in doubt, take the insurance anyway, or consult a professional. We are more than happy to help you out. 4. Don’t risk violating the trademarks: You can’t just go against the law by violating its trademark and copyright policies and shake it off later. This is an absolute foolish thing to even consider. If you want to establish an empire you need to follow the rules from the very start of picking up a name for your business. Go by the books, and register everything but before that make sure that nobody else holds the trademark or copyrights of the same or similar name and logo. If you ignore this, you may end up losing your whole business and not just the name. 5. Don’t forget about the taxes: You are already done with trademarks and copyrights of your company name and all the work with insurance, you are almost ready to get started with your business. But before that think about the way you will be going to pay off your taxes. Apply for an employer identification number online so that the government can make out the difference between your business and others while collecting the taxes. 6. Get your license: Some industries and niches require a license not just to prove their specialization in the industry but to open the doors of their start-up. Every country has different rules and terms and conditions about the requirement of a license. You need to check out if your profession or business falls under the category of that in your country/state or not. If yes, then you need to get it as soon as possible, don’t take chances of avoiding it.

7. Hire legal help: Not only a business but every professional needs a good lawyer or an advocate to take care of the legal matters involved in the business. Ask the lawyer before hiring them that why does your business need a lawyer? Hire them only after getting a satisfactory answer to your questions. Don’t just hire them because they claim they are the best in the business, ask your doubts and go with the one who clears out all your doubts. But, why do we need to hire a lawyer? Here are a few common mistakes that entrepreneurs make and this is the reason why it is important to hire a lawyer for legal matters: 1. Not filing the paperwork the right way: Paperwork like company formation, partnership deeds, LLC, insurance, etc, are lengthy procedures and requires a lot of time and attention. Most entrepreneurs fail at setting up the right structure for the business by not doing it the right way. 2. Having a faulty policy: If you are making your business privacy policies and terms and conditions by going through just online, you can make huge

mistakes. If these policies find out to be faulty in any way for your business, your customer or your client can take you down badly. Every individual business requires its terms and conditions by keeping in mind the customer or clients of the business and the nature of the business. It is not something you can copy and paste from the internet. And do I even need to tell you how important it is to have a privacy policy? Not only that you need to keep it public as well. The privacy policy is not only important for the business or customers but it is a law that every business must have a privacy policy. 3. Failing to keep the track of taxes: I agree, this is something you need a good accountant for and not a lawyer, but what if your accountant failed in his job? What consequences will you face later? To avoid such a thing, you need a lawyer. Law for taxes is insanely complicated and hard to understand, don’t think of handling it by yourself unless you have a law degree. 4. Rough drafts or contracts with the third party: When you do business with an outside party or the third party you have to make sure of the deal you are having with them on the papers, by making a perfect contract and not just a rough draft for the sake of the law. An amateur help for making such contracts is not advisable at all just to save a few bucks. Hire someone with experience and expertise. It is always to take precautions first then finding the cure later. 5. No proper paperwork of employees: Do you know it is a law in some countries to maintain a file of every employee. A file that has every personal and professional detail about that employee. It is hard to keep the track of all the documents required in that procedure, that’s why you need a lawyer. It would be his duty to make sure the people you are hiring have a clean background and are good for the company. 6. Failing to set up a non-disclosure agreement: This kind of agreement is the need of every business. It binds the employee, clients, or your customer from revealing the important information of your business by law. If you failed to have a proper disclosure agreement, your employees are free to talk about your strategies, insights, and plans for your business to anyone. No matter what is the niche of your business, if you are planning to grow an empire you need to have all the right agreements with you. 7. Not getting proper paperwork done for the trademarks and copyrights: Do you know why I said you just can’t copy and paste the privacy policy from the internet? Because even privacy policies have trademarks. Anyone can sue you for copying their policies. That is why you also need to get the work done on your trademarks and copyrights properly and the right way, so that it wouldn’t cause you any problem in the future. And the biggest mistake is not calling out for an attorney. Most entrepreneurs think that they can always get help from a freelancer whenever they feel the requirement. That is when they go very wrong. Don’t make this mistake. Hire a lawyer to help you with all the paperwork and let him handle the legal matters. So that you don’t have to regret in the future for not doing it correctly the first time. Laws are complicated, you shouldn’t risk your business’ future by taking matters into your hand. Hire the legal help or if not then hire a

consultancy or an agency who can do this for you. It is always good to blame others than ourselves for the mistakes. Now, you have decided to hire legal help, here are some documents that every business must have: 1. Articles of Incorporation: It is a document that confirms the existence of your business. It is also known as a certificate of formation. 2. IP (Intellectual Property) Assignment Agreement: It is a kind of document that allows the owner to talk to your client on the work your company has done for them. IP assignment agreement has different types; it all depends on the type of business you are running and the country where you run your business. 3. Bylaws: This is to take control of certain actions of employees, members, and your clients to set up some ground rules. 4. Operating Agreement: This is also known as the founder’s agreement. This agreement defines the roles and expectations of each founder involved in the business and the resolutions of the conflicts that can arise in the future. 5. Non-disclosure agreement: I have already given you a glimpse of this document and how important it is to have for a business. It helps your business bind the employees or clients to reveal certain and important information about your business. 6. Offer letters and employee contracts: This document is something that the working person is aware of. It includes the expectations from the company and the offer they are giving to the employee with all sorts of terms and conditions and other legal terms. 7. Shareholder Agreement: When a company decides to welcome private investors, a shareholder agreement is the first thing that you need to make sure done carefully. It includes the roles and rights of the investors in your company and what would happen if something goes wrong. Most entrepreneurs make this mistake by not establishing strong document work for their business. Don’t ignore this by thinking of it as a small business or a start-up, you can still face a lot of consequences and heavy lawsuits if you don’t have the right paperwork with you. Conclusion: Entrepreneurs can face a lot of consequences and hurdles while setting up their business, but all these problems have a solution. Hire the right help for your business so you don’t have to deal with the consequences legally. After going through all these troubles and getting the work done, entrepreneurship is not a walk on the cake. It is full of challenges and ups and downs. One should always be prepared for the worst; it is a practical thing to do. But ignoring all the struggles and challenges an entrepreneur can face, starting a business is one of the most self-empowering things. If you want to start a journey where you can be your boss, we are here to help you.