What legal steps should I take to protect myself when starting a new business in California?
By
As a lawyer, I would advise anyone starting a new business in California to take the following legal steps to protect themselves:
- Choose an Appropriate Legal Structure: Careful consideration should be given to the legal structure of your business, such as whether it should be a corporation, a limited liability company (LLC), a partnership or a sole proprietorship. The legal structure you choose will have an impact on tax liabilities, how profits are distributed, and the personal liability of owners. Consulting with an experienced business attorney can help you make an informed decision.
- Obtain Business Licenses and Permits: Depending on the nature of the business and its location, there may be different licenses, permits, and certifications required. It is important to research and comply with these requirements to avoid any legal troubles.
- Register with the Secretary of State: In California, every corporation, LLC, limited partnership and limited liability partnership must register with the Secretary of State. This provides legal recognition to the business and also helps protect the owners' personal assets.
- Secure Intellectual Property: It is essential to ensure that your business’s inventions, designs, and products are protected by applying for copyrights, patents or trademarks, depending on the item in question, and the industry.
- Draft and Review Business Contracts: Many issues could be prevented with properly drafted business contracts. It should entail agreements between owners, operating agreements, employment contracts, non-compete agreements, non-disclosure agreements, and vendor contracts.
- Comply with Labor Laws: California has strict employment laws that require compliance. This includes defining employment relationships, employee handbook, overtime and wage laws, employee benefits and discrimination laws.
- Develop a Data Privacy Policy: Every business should have a data privacy policy to protect their customers and ensure that their data is secure. As a business owner, you must take reasonable steps to secure any personally identified information and comply with California's privacy laws.
In conclusion, starting a new business is a complex process. It is crucial to seek legal advice from an experienced attorney who specializes in business law. Legal advice may help you avoid many pitfalls, ensuring you have the best possible chances for long-term success.
