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Starting a Business? Here’s a Simple Guide to the Legal Stuff

Starting a Business? Here’s a Simple Guide to the Legal Stuff

Jaime Bell is a West Coast business lawyer at AWE Legal, a boutique law firm based in British Columbia, Canada. Jaime loves working with creatives, entrepreneurs and freelancers to ensure they have the legal framework for their businesses in place.

When you’re just starting your business, the last thing you’re probably excited about is tackling the legal side of things. I get it, it can be totally overwhelming, scary, potentially expensive, and easier just to avoid all together.

But laying out a solid foundation right from the start will let you focus on growing your business, rather than worrying if you’re protected. Here are a few legal tips to help get you started:

Get your Name Approved, Register your Business and Register for GST/PST

If you are operating a business under any name other than your personal name, you need to have your business name approved and registered with the Province of British Columbia. You should then open up a separate bank account for your business (while this isn’t a requirement for a sole proprietor, it is mandatory for corporations!). Next, consider whether you must (or should) register for your GST and PST number and hire an accountant to help with this if possible.

Contracts. Contracts. Contracts.

You didn’t think you were going to read an article written by a lawyer that didn’t tell you to put it in writing, did you? We love contracts at AWE Legal, and you should too! For small business owners, there are 3 essential contracts you should have for your business:

1. Client Services Contract: If you offer services to clients that you are getting paid for, you should have a contract that sets out all the important details. Things  like what services you will and won’t provide, what services you will provide for an additional fee, timelines for delivery, payment terms, cancellation policy and what you expect and need from your clients to do a great job.

One of the biggest mistakes I see (other than not having any contracts for their business) are service agreements that are really one-sided, either in favour of the business owner or their client. Service agreements are an amazing way to set the tone for your relationship and I recommend making this part of your client on-boarding service from the start.

2. Terms of Use and Privacy Policy for your website: If you have a website, you need these in place! Your Terms of Use is a contract with your visitors that  sets out how they can and can’t use your website, the terms around purchasing anything from your website (like courses), and how they can or can’t use your intellectual property (such as pictures and blog posts).

Your Privacy Policy provides information about how and why you collect, store and process any personal data obtained from visitors to your website. Even if you aren’t outright collecting personal information, your website is likely using cookies and collecting data from your visitors, so you need a privacy policy in place.

The biggest mistake I see are privacy policies that don’t actually reflect how businesses are handling their visitors’ data. Talk with your web developer to make sure you understand how you are collecting data, or do a deep dive into your website to make sure you understand why, how and what data you are collecting from your visitors.

3. Independent Contractor Agreement: Just because you call someone a contractor doesn’t mean they are! If you are hiring an independent contractor in your business, you should have an agreement setting out the terms and parameters of hiring them, and set out very specifically all the ways they are not an employee.

The line between a contractor and employee is often blurred and there can be major financial repercussions if your contractor is later deemed to be an employee, so it’s best to speak to your lawyer before hiring.

Business Structures

In Canada, there are a number of ways to structure your business, but most businesses fall under one of the following categories:

Sole proprietor: This is the simplest and most common form of business ownership. You run your business on your own and there is no difference legally between you and your business. You get all your profits and are personally responsible for all your debts.

Partnership: You have teamed up with at least one other person to start a business with an intent to profit. You and your partner(s) share in the profits and losses, and are each equally responsible for debts incurred by any of the partners on behalf of the business, unless a partnership agreement says otherwise.

Sitting down with your partner and discussing how your business will be funded, how work is divided, how decisions will be made and what happens if one of the partners wants to leave the business are all really important conversations to have prior to operating, and then put into an agreement.

You can also lay out ownership and liabilities in the agreement, since the law presumes all partners are equal.  It’s so much easier to have these discussions at the beginning of your partnership, but if you haven’t done this, the next best time is now!

Corporation: An incorporated company that is a separate legal entity from the people who have started and own it.  It’s a more complicated set up, but one of the main benefits is that liability remains separate (for the most part) from its owners and there are some tax advantages as well.

If you are looking to get a bank loan, or searching for investors, each will (likely) require your business to be incorporated. Before you incorporate your business, speak to your accountant and your lawyer to make sure you structure your company for growth!

The biggest mistake we see when small business owners are DIY’ing their incorporation, is that their initial share structure doesn’t have the flexibility they need to grow. It costs a lot more money to make changes to your company down the road. Do it right the first time!

Protect your Idea!

When you’ve come up with a great idea, don’t you just want to shout it from the roof-tops?! In some instances, keeping your idea to yourself isn’t a huge issue, but for others, it could be the difference between being first-to-market or not.

See Also

If you need to bring on contractors, or share your idea to move ahead with your business with potential partners, investors or new hires, having a non-disclosure agreement signed by the party before you share the details about your business is a good way to protect your idea. 

Insurance

This is a big one that a lot of entrepreneurs skip. It’s important to have a commercial insurance policy with general liability coverage and one with property coverage (if you have any physical component, like camera equipment, props, or office space).

As your business grows, and especially if you are providing coaching or courses where you might be considered to be giving advice, you should also consider professional liability insurance. Cyber insurance is also becoming more important to protect against losses from a data hack or breach.

Trademarks

If your business is a heavily branded business, you should consider registering a trademark. A trademark is a combination of letters, words, sounds or designs that distinguishes your goods or services from others in the marketplace and as your business grows, a trademark can become one of the most important assets of your business!

If you are starting your business and think you might want to register a trademark down the road, talk to your lawyer about doing a trademark registry search early on, as it’s a good idea to search the market before going too far down the branding process.

Your lawyer will be able to tell you whether there are any reasons why you might not be able to register a trademark, since not every trademark can be registered. Doing a search early on is a great way to avoid an expensive rebranding process down the road, and to determine whether your trademark is overtly similar to another company’s.

Trademarks are also federally protected, meaning once you successfully register you have Canada-wide protection.

Build your Team

When you’re starting your business, don’t spin your wheels. There are experts out there who want to help you succeed, and take the guesswork out so that you can focus on why you started your business in the first place. Think and plan like your business is going to be a huge success, so you’re totally prepared when it is!

Connect With Jaime:
Website: www.awelegal.com
Instagram: @jaimekiara_

Connect With Us:
Website: www.coffeeandsmiles.com
Instagram: @_coffeeandsmiles.com

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