Starting your own business can be an exciting time. Be it because you’ve worked up the courage to quit a corporate job and delve into your passion full-time, or because you see a business opportunity in a community’s unmet need, you’ll likely be eager to hit the ground running.
While enthusiasm will certainly be a valuable asset in your new business, you should be careful not to jump into things too quickly. Establishing the right legal foundation for your new business from the onset can prove worthwhile and ensure steady growth.
In this post, we examine three key protections you should be sure to put in place:
Clear business structure
If you’re just starting out, it is wise to properly register your new business. In Ontario, the available options are as follows:
- sole proprietorship
- LP or LLPs
Factors such as taxes, your personal assets and your family can affect what business structure is right for you, never mind the particularly business you wish to conduct. It is important to discuss with a lawyer how best to protect yourself whilst benefitting your commercial enterprise.
Service agreements and disclaimers
You need to take steps to protect the products and services your business provides. For some businesses, this will include registering business and product names, or trademarks. For service-focused businesses, it is important to have standard agreements that provide a clear breakdown of responsibilities – what you provide, and what your clients are obligated to pay. You may wish to define other obligations and clarify liabilities if you are providing goods. It is wise to work with a business lawyer to draft a robust disclaimer – particularly if you work in a high-risk profession.
Non-disclosure agreements and non-solicitation or non-competition clauses
When dealing with contractors, partners, or even employees, you’ll probably find yourself in the position of having to share sensitive information with them – such as account information or client records.
Having a comprehensive non-disclosure agreement in place can set clear expectations and ensure that you have clear legal recourse if confidentiality is breached by those with sensitive information. Depending on the nature of the business, a non-solicitation or non-competition provision may be called for to further protect trade secrets.