What Young Entrepreneurs Need to Know About Business Law

What Young Entrepreneurs Need to Know About Business Law

Mariam Sulakian
 | 

Every entrepreneur should have a lawyer's phone number in their contact list. Business law is complicated. Here's a primer on it.

1. What is business law?

Taxes, intellectual property, contracts, employment, bankruptcy, consumer protection: these are all sectors of law that revolve around creating and running a business. You can think of a business as its own legal entity–that means your business must comply with all state and federal laws, including taxes and handling employees. While business law does govern how you build your business, it also helps to protect your ideas and assume adequate responsibility over your employees.

2. Get Your Business License

The first step to your entrepreneurial pursuit is...well, legally forming your business. You’ll need to pick which type of business entity you want to form, whether that’s a limited liability company (LLC) or corporation. Each type of entity will have its own legal considerations that include factors from taxes to funding. It’s always a great idea to obtain legal counsel if you’re unsure which type of business to form.

Once you’ve figured out the basics of your business, you can get started on obtaining your license. The process varies depending on the type of license you’re looking to get, but state or federal websites are a great starting point for documents you need to complete. An attorney can help ease the process, which can amount to a tedious process depending on the number of jurisdictions you need to seek information or approval from.

After you’ve filled out the paperwork and paid the associated fees, actually obtaining your business license may take days or months. Timing will depend on your local government.

3. Understand the Tax Laws

As an entrepreneur, it’s important that you understand tax laws. You should be aware of both state and federal taxes and also factors like employee taxes. The IRS has information on tax responsibility that can help you figure out what you are liable for; however, considering taxes can get tricky, hiring an attorney can aid in ensuring that you comply with all laws.

An attorney can also help you minimize your taxes by aiding you in finding specific tax forgiveness plans, deductions, etc. Handling taxes can get further complicated when you hire new employees.

4. With Employees Come...Employment Laws

Besides impacting your taxes, hiring employees means entering into a whole other realm of business law. You’ll first want to understand the difference between employees and independent contractors–and if you’re appropriately labeling your workers.


Employee laws include regulations like the Family and Medical Leave Act (FMLA), Worker’s Compensation, and Federal Equal Employment Opportunity laws. You should have at least a high level overview on how these laws impact your business. For instance, the FMLA requires employers to provide their employees with a certain number of paid off days to deal with family and/or medical situations. 

5. Advertising & Marketing

In the most basic sense, advertising and marketing laws require claims about your product to be truthful. You should be able to back up any claims you make with evidence. Relevant laws include Truth in Advertising and Marketing and the CAN-SPAM Act. The former details requirements to safeguard the public against deception, and the latter regulates commercial emails, e.g. allowing users an easy opt-out option.

6. Protect Your Intellectual Property

To protect your company’s value, and profit off your inventions, you’ll want to properly secure your intellectual property (IP) rights. IP laws make sure that your innovative ideas legally belong to you through copyrights, patents, trademarks, etc. For instance, copyright laws allow you to profit off of your creative work commercially, and a lawyer can help you register and enforce those rights. A patent can provide you with exclusive control over an invention, while trademarks protect your brand name and logos.

It’s tough to know what kinds of challenges will arise down the line in regards to your IP. So if you’re wondering whether legal counsel for IP is worth the extra investment, it probably is. You want to ensure that you have all your assets protected in the case of future issues. 

7. Should I Hire an Attorney?

An attorney can help you properly form your business and tackle all of the above mentioned business related laws. Especially when it comes to the entrepreneurial world of contracts, an attorney can clarify the complex, legal terminology and work in your best interest. While an attorney’s fees upfront may seem like an investment, your attorney can help you mitigate potential hazards and avoid lawsuits, which can cost much more.

 

This article is intended to convey generally useful information only and does not constitute legal advice. Any opinions expressed are solely those of the author, not LawChamps.

 
Mariam Sulakian

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