Top entrepreneurs understand that finding the right attorney is a complicated and at times vital aspect of running a successful small business. From navigating complex legal issues – such as contracts, intellectual property, and employment law – to ensuring that all laws and regulations are followed, seeking advice from a trusted attorney can provide business owners with the peace of mind they need to focus on growth and profitability.
But with so many different types of attorneys and services available, how can entrepreneurs be sure they’re making the right choice? What are some of the common legal services that entrepreneurs need? And, what best practices should entrepreneurs keep when it comes to their company’s legal requirements?
To answer these questions, Trend looked to Chattanooga Chamber members, Grant, Konvalinka and Harrison – a local law firm that’s served Chattanooga businesses for more than 50 years.
Michael A. Holmes and David M. Elliott, the experts at Grant, Konvalinka and Harrison, offer these top five legal tips for small businesses.
Design contracts with your business in mind
Well-written contracts help business owners clarify expectations and protect legal interests right as the business launches. Creating standard forms and agreements helps your business govern relationships with its suppliers, customers and employees. Attorneys can help anticipate issues that may arise if a dispute occurs with any of these relationships.
Consider using contracts to offer clarity for your most important transactions like scope of work, payment terms, and termination rights. A best practice is to review and update contracts regularly to ensure they remain both relevant and enforceable.
Periodically reviewing and updating contracts is especially important when businesses are undergoing change or expansion – whether that’s expanding into new markets, adding products or services, or hiring new employees and contractors.
Create, maintain and update your exit strategy
An exit strategy is a plan that outlines the owners’ rights and responsibilities upon retirement, disability, death or a desired liquidation event.
This often-overlooked aspect is especially important when dealing with multiple owners — you may relish running your business with your chosen business partner, but not with his or her family, heirs or estate.
Common exit strategies include restricting the transfer of equity interests, transferring those interests to a partner or family member, selling the business to a third party or simply winding down and cashing out.
As attorneys, we help owners address estate and tax planning concerns and carry out their desire to reward valuable employees when exiting their businesses. We recommend that you address exit strategy considerations at the outset in your operating agreement, shareholder agreement or other governing documents.
Protect your intellectual property, including trademarks, copyrights and trade secrets
Your intellectual property could be your most valuable asset. Consider protecting your name and brand by registering your marks and obtaining a registered domain name.
While there are some common law rights for words, logos, pictures, letters, shapes or any combination of them, businesses can obtain increased protection by registering a federal or state mark (trademark for goods, or service mark for services).
Registration provides an exclusive right to use your mark in relation to the goods and services you specify in your application, which courts generally will enforce against infringement or misuse.
Determine the availability of a new mark or brand early in its creation process to avoid committing to a mark that might already be in use. Original creative works including literary works, computer programs and manuals should be marked with a copyright notice and copyright applications should be filed promptly with the U.S. Copyright Office for increased protection.
We also recommend using non-disclosure and non-competition agreements for the protection of trade secrets and proprietary information for anyone with access to your sensitive information.
Build a relationship with an accountant or accounting firm
While some business owners are often tempted to manage the finances of their business along with their own finances, this approach can lead to costly mistakes and missed opportunities.
An experienced accountant can provide your business with valuable advice on tax planning – like maximizing deductions and ensuring compliance with state and federal guidelines.
Accountants can provide tax services that add instant value to your business through efficient tax planning while avoiding penalties and audits.
Make sure to consult with a certified public accountant who can get to know your business, and not just during tax season. Accountants can also help you manage your finances more efficiently by helping you create financial projections, set budgets, and monitor your financial performance.
Having a trusted accounting firm as a team member will relieve much of the burden that comes with managing your business’ finances. It can also free your time to address the more important operational aspects of your business or spend more time enjoying family, friends and hobbies.
Protect against and mitigate risk with insurance coverage
Business owners need to carefully consider risk and insurance coverage when evaluating company operations.
While it is impossible to fully eliminate or insure against all risks, giving careful thought to the types and amounts of insurance coverage needed to properly protect your business is vital.
The risk profile for most businesses today is becoming more complex and purchasing only $1 million of general liability coverage, property insurance, and state minimum workers’ compensation is no longer sufficient in today’s world.
Business owners today need to consider a variety of different coverages, including cyber, professional liability, employee practices liability, crime and umbrella policies. They should also be mindful of how much coverage is purchased and pay attention to the fine print in the policies – especially terms related to claims reporting and exclusions.
We recommend having a trusted insurance agent on your team to help you consider and address your coverages.
Starting and operating a small business requires planning and attention to detail throughout the process. By following these tips, you can mitigate risks and place your business in a better position to succeed. The attorneys at Grant, Konvalinka & Harrison, can help you navigate this process every step of the way.