5 Legal Tips For The New Age Business Woman
5 Sure Legal Tips For Your Business |
No one can truly prepare you for entrepreneurship and its many hurdles. You may read all the motivational books in the world, but if you’re not cut out for business, you’d probably feel awful forcing yourself to do it.
That’s because entrepreneurship is not for everyone. Some of us prefer our 9-5 jobs, and there’s absolutely nothing wrong with that. The best thing is to find what works for you and enjoy it.
On the other hand, if you’ve decided to start your own business, then congratulations! Business is about providing value, filling a gap in the market, and making money while at it. So we’re glad you found a way to do this. You are now a boss.
To achieve longevity as an entrepreneur, you need to avoid the many pitfalls in business. One of the best ways to do this is to remain informed, especially about general and technical business regulations in your chosen field. You may not be able to afford a hotshot lawyer to give you sound legal advice, but you can always adopt the DIY method for a start.
All you need to do is educate yourself on the legal aspects of your chosen field of business. You could save yourself from heartache just by knowing the necessary things.
So ladies, welcome to class.
1. Register Your Business Name
Now, this first tip may seem like something you can put off for a while, but I assure you, it is of the utmost importance. Your business name is the very first part of your brand identity. It indicates what you do, your niche, and your services.
You may think you’re safe just because you’re still operating a small business venture, but things could go south at any time. A lot of creativity goes into building a brand, which begins with the name of the brand. When your hard work finally pays off and you feel ready to register your business name, you wouldn’t want to find yourself in an intense legal battle over a name you created, would you?
A friend of mine had this weird experience last year. She started her business towards the end of 2020, which was a big deal for her. She already chose her business name, created her business logo, and then opened social media accounts on Instagram and Facebook.
Sometime in 2021, a Chinese business organization reached out to her. They claimed to be IP/Trademark specialists. According to them, a businessman in China was about to register her business name as his own. They noticed a pattern where he checks for small businesses, steals their brand names, and registers the name in China. He will then resell it to any big organization that calls, or the business owner would have to buy it from him.
He can only do such a thing when there is no evidence of registration. Just imagine how many small businesses this man would have destroyed. So while you’re waiting to go big before registering your business name, there could be someone out there already planning to sabotage you, literally!
Another reason you should register your business name is it prevents you from using a registered name within your jurisdiction. While social media affords you some opportunities to research existing business names before you choose, some businesses have little or no social media presence. It also saves you from using a name that is too similar to an existing brand to avoid legal issues later.
So to get the most legal protection, we suggest you do your research using social media and the Corporate Affairs Commission or any equivalent body responsible for the business registration within your jurisdiction. Whenever any issue of trademark infringement comes up, the court will give preference to the person who registered his business name first.
Alternatively, you may successfully reclaim your business name with sufficient evidence of prolonged use before registration. But this option is more corrective in nature. It can cost you a lot of money, time, and energy in prolonged legal battles.
The smart thing is to protect your interests early. Do the smart thing.
2. Choose Your Business Structure
You can register your business as a one-man business (sole proprietorship), a partnership, or a company. Each of these models has its peculiar structures, advantages, and disadvantages. We recommend you register your business as a company.
One of the advantages of registering your business as a company is that you become a separate entity from the company. It will become a juristic person, capable of suing and being sued in its name. It will have its registered place of business, directors, and its common seal.
If you register as a limited liability company, you can limit personal liability. The company’s debts would not be settled using your assets unless the company engages in some form of fraudulent purpose. With your registered company, you have better chances of applying for business loans and winning corporate contracts, especially when your company has sufficient visibility.
3. Everything Should Be In Writing
One of the biggest mistakes small business owners make is that they tend to disregard the need for documented contracts. Oral agreements are good, and written agreements are great!
The essence of any contract is for both parties to agree, but without concrete evidence, any party can deny the original terms of the agreement.
You get better legal protection when you keep records of your contracts like payment receipts, invoices, service agreements, or employee contracts. Have as many records as you can.
Do not take any agreement for granted, even with close friends and family. A young businessman made this mistake and is paying for it now. As a forex trader, he received money from investors and traded it in the forex market. Usually, he gives a written contract to investors to go through the terms and sign.
However, when it came to his close friends, he neglected to have a signed agreement with them. The forex market crashed, making him unable to pay the agreed interest rates. His close friends were the first ones to call for his head. They involved the police, claiming he obtained money from them under false pretenses.
He could have avoided all these if he had a written contract with them clearly stating the agreed terms. This includes the risks of the investment and who bears liability in case things go awry. A written contract gives room for transparency and accountability.
You should also have an organized structure for documentation. This way if any dispute arises, you would have a system to help you retrieve the information easily. You can never be too careful.
4. Regulatory Compliance
Ignorance of the law they say is no excuse. Just because you are unaware of the existing policies and regulations in the industry does not exempt you from such policies. You must learn the applicable laws that regulate your industry, especially if you intend to have a prolonged stay in the market.
I read a post about a businessman who started a delivery service company. He bought two motorbikes, registered his business, and commenced operations. Not too long after, the regulating agency for delivery services tracked down the company, seized the motorbikes, and shut down operations.
He had failed to obtain a license before commencing operations in that industry. He pleaded with them to give him some time to raise the money, but his pleas fell on deaf ears. In the end, he lost all the money he invested in purchasing the motorbikes, renting the business premises, and registering the business.
You may think regulatory compliance is irrelevant, especially when it seems like everyone else is getting away with it. Make no mistake, you just might be the unfortunate example the regulatory agency decides to use. No one likes to be the scapegoat, and if you end up being the scapegoat, what would be your excuse? Everyone else was doing it?
When you equip yourself with the knowledge of all relevant laws in the industry, you can make a well-informed decision as to whether or not you should invest in such a venture. It is better not to waste resources on a business venture that will drain you of all your capital without any sustainable returns.
5. Taxes! Taxes!! Taxes!!!
Every individual or business organization must pay taxes to the government. This is an important civic responsibility. Apart from the company income tax, there may be specific taxes your business is required to pay within its industry.
Additionally, your company may provide services that cut across multiple industries. Do your due diligence to know what taxes apply to you. Your company stands to have increased access to government services if you have your tax number and updated records.
Luckily, the government gives tax exemptions to small and medium-sized enterprises. In Nigeria, the Companies and Allied Matters Act exempts companies who earn below 25 million naira yearly from paying taxes. So the only tax you would be required to pay is the personal income tax and the VAT on purchased items.
First, confirm which category you fall under and know all applicable taxes. The thing about taxes is that they don’t go away. Even if you refuse to pay, it just piles up anyway. Next thing you know, you have a heavy backlog of taxes, and the government is breathing down your neck. So much for being your own boss.
Not to mention, tax evasion is an actual crime. You do not want to find yourself in jail anytime soon, do you? What would become of your business then?
Finally
Working for yourself can feel liberating indeed. You have no official work hours except the one you give yourself. No boss is breathing down your neck or telling you what to do, and most importantly, you get to claim all the profit!
But on the flip side, being in business also comes with major and minor risks. If you’re not careful, you could be out of business just as quickly as you got in. Big brands are not safe, much less small businesses with minimal funds, experience, and exposure.
So be on the lookout, learn all there is to know about your business and protect your interests early.
After all, prevention is always better than cure.
All images are sourced from pexels
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