Small Business Starting a Business - Free Enterprise

Free Enterprise - The FindLaw Small Business Law Blog

Recently in Starting a Business Category

Starting and running a business is ripe with risks, both to the individual and the business. However, when an individual elects to run their business as a sole proprietorship, they are personally taking on the business's legal risks. The most frequently raised concern of sole proprietors involves their personal liability for business debts.

For example, if a customer is injured, a sole proprietor could be personally sued, and his personal assets seized in a judgment, whereas if the business were structured as a separate entity, the business owner could potentially avoid personal liability. For a sole proprietor, liability is a complex topic and, surprisingly, it can actually cut both ways.

You know you can't start a business for free. Any comprehensive business plan will include an estimate of start-up costs, considering everything from rent and employee wages to inventory and insurance. The one thing many entrepreneurs may neglect in these calculations, however, is legal fees.

You may need an attorney's advice throughout your startup's life, from incorporation to employment law compliance. So here's a look at some of those legal fees, and some ways to keep them in check.

You've gotten everything you think you can get out of your current gig, and you're ready to strike out on your own. But if your new startup is in the same field as your old job, you may run into one or two legal hurdles first. Understandably, employers don't like competing against ex-employees, especially those who took some proprietary information or an intimate knowledge of the business with them.

There are a few ways that companies try to protect their secrets, and you might need to be wary of them before launching your startup.

Venture capital funding for new drone startups is no longer on the rise. Despite the fact that the new FAA regulations that went into effect this past August provide certainty for companies looking to utilize drones, since the regulations were announced, drone startups have received less and less funding. Shockingly, from the second to third quarter this year, drone funding plummeted by by half.

According to MarketWatch, funding for drone companies has fallen by 59 percent since last year. In the second quarter of this year, $106 million was invested in 13 different deals. However, in the third quarter of this year, there was only $55 million invested into 8 different deals. For the companies that make drones, especially ones that are just starting up, this news is frightening.

It's never easy going into business for yourself, by yourself. But at the same time, it's never been easier. On the one hand, it's up to you to create the business plan, do market and competitor research, incorporate your business, secure funding, and handle the day-to-day business decisions. On the other hand, there are more free, online resources for taking care of all that than ever before.

But just because you can go solo as an entrepreneur, doesn't mean you necessarily should. Here are a few things to consider before becoming a "solopreneur."

The term 'due diligence' is something that most business owners should be familiar with. But the concept of 'human rights due diligence' is often overlooked. Quite simply, businesses need to be aware of possible human rights violations in order to avoid facing backlash from customers. For example, think about the clothing industry: major brands face pressures from consumers to not only keep their prices reasonable, but to also produce their products without using sweatshops.

Human rights due diligence requires businesses to look at the impact they have on the human rights of their employees, consumers, and everyone in their supply chain. While factory workers assembling a product in the US may have good jobs, benefits, and a decent standard of living, the lives of the overseas workers on the supply-chain might be living in poverty. Even if your business does not employ workers overseas, if your suppliers do, consumers may not see a difference.

Married small business owners often overlook a common reason why some businesses fail: divorce. In most states, one spouse's small business can be considered a marital asset or marital property. When a couple divorces, assets need to be divided, and that small business can be a couple's largest asset. That's why it's important to make sure your business is divorce proof from the outset.

Fortunately, there are ways to protect a small business after a divorce has been filed. Nonetheless, it is a good idea to protect the business from division before divorce happens. To understand your situation, you first need to know if your business will be separate or community property.

If you forgot to divorce-proof your business before filing for divorce, your only option may be to give up other assets, such as the house, cars, or retirement accounts in order to maintain control of your business.

Most entrepreneurs start and end their careers as a sole proprietor. However, the more successful ones eventually incorporate, and the most successful ones start, run, and sell, multiple businesses at the same time. For the serial entrepreneur, there is no one right way to go about structuring multiple businesses.

Sometimes a serial entrepreneur will have multiple businesses all focused in one industry. For instance, a surf shop owner may own the surf store, as well as make surf boards, bikinis, offer surf lessons, sponsor a professional surf team, and make surfing videos. Apart from being one of the most motivated surfers to ever ride a wave, this serial entrepreneur would really benefit knowing the different kinds of corporate structures and how to structure multiple businesses.

Whether it's the grind of your 9-to-5 or the allure of making it on your own, you may be considering taking your talents on the road as a freelancer. The good news is that it's probably easier than ever to find a freelancing gig; the bad news is that it can still be hard to make a living freelancing. Remember, you'll be in charge of everything, from client acquisition and retention to production to contracts.

Here are some legal issues to consider when pondering the leap from employee to freelancer.

We're guessing you didn't go into business to get buried in paperwork. You may be thinking that a bunch of legalese will only bog your startup down, but the right set of contracts will serve to clarify things down the road. And putting the work in early will only mean a clearer path to success ahead.

Clear and concise contracts can be the difference between smooth sailing and a storm of litigation, so here are five tips regarding startup contracts, from our archives: