7 Legal Considerations to Know Before Starting Any Business

by Zaara 22, Sep 2020

Nothing can be more exciting than the thought of starting your business. Of course, there are risks involved, it can be a daunting process, but when your dream comes true, these things started turning invisible. One of the things that people don't overlook is the legalities and procedures to be completed before registering a business. Part of what makes starting a business complicated is its legal implications.

As a business owner, you want to make sure you have covered all your legal bases to avoid any fines, lawsuits, or—worst case—even jail time. Therefore, to ensure that you start on the right note, here are the top seven legal issued to consider when you set up a business.

1.Choosing the Right Business Structure

A right business structure is essential for your business. It all depends on the number of business activities, appetite for risk, the required level of flexibility, cost implications of each structure, and the tax consequences. There are four main types of business structures namely –

  • Sole trader – A business started by a single person
  • Partnership – Two or more individuals running the business
  • Company – A distinct legal entity from its shareholders
  • Trust- An entity holding the assets of the business for the benefit of others

A business setup consultant can run you through the pros and cons of these structures to help you make a wise decision.

2.Protecting IP

The startups that are introducing innovative products and new concepts to the marketplace must protect intellectual property like trademark, patents, and copyrights.  Intellectual property is a central asset of any business – it can include things like:

  • Your company name
  • Your brand
  • Your domain
  • Products you have shaped or the creative ways you produce them

We at Commitbiz provide intellectual property service in the UAE. Our intellectual property legal services include all aspects of copyright, trademarks, design, IP Audits and IP searches.

3.Written Business Partners Agreement

Sometimes things can go wrong with your founding members when you start the business together. There can be disagreement in roles, vision for the company, responsibilities, and remuneration. Therefore these points must be discussed carefully. One must also discuss things like what will happen if one of the members decide to leave or expired. All that you and your co-founders agree on should be detailed in a Founders' Agreement. What is written in this contract will determine the outcome of any disagreements that may arise between the co-founders.

4.Employee Duties and Obligations

There are a few obligations that may come your way while hiring employees.  Some of your legal responsibilities as an employer include:

  • Paying your employees proper salaries
  • Providing employees with payslips
  • Compensating your employees for work-related expenses
  • Ensuring a safe and healthy working atmosphere
  • Guaranteeing you have workers compensation insurance for each employee
  • Not acting in a way that may extremely damage an employee's reputation or cause mental pain or humiliation
  • Not acting in a way that damages the trust and confidence essential for an employment relationship
  • Not providing an untrue or misleading reference

To make sure that your business operates legally from the outset, you need to conduct thorough research and discuss your employee obligations with a legal expert or business advisor.

5.Establish a Privacy Policy

A privacy policy is a legal agreement that specifies what a business does with the personal data collected from users or customers, along with how the data is processed and why. Violation of privacy laws can lead to criminal liability—depending on your state; this can mean hefty fines—so it's important that startups have proper privacy policies in place and carefully adhere to them.

6.Relevant Health and Safety Law

As a businessperson, you must assume many important health and safety responsibilities, including ensuring that your employees are working in a safe and healthy environment. Therefore, it is highly recommended that you carry out a risk assessment to help identify the risks posed to individuals by your business activities. You then have to mitigate these risks or hazards as much as possible. This may include changing some standard operating procedures and removing some fixtures to ensure that employees and members of the public are safe.

7.Zoning Laws

Make sure the location of your office in a safe location. Do some research or ask the governmental bodies to be sure that you open your business in that area. Do not make the expensive mistake of assuming that your zoning is appropriate just because your business is similar to the ones already located there. There will be instances wherein zoning may have changed while the other businesses were already operating, and these companies may have been given exemptions that won't be provided to new establishments such as yours.

Planning for disaster now, while admittedly unpleasant to think about, can help prevent it in the future.

We at Commitbiz help businesspersons start a business in the UAE. Our experts can help you right from company formation to providing office space. Contact us today for more information.