Top entrepreneurs understand that finding the right attorney is a complicated and at times vital aspect of running a successful small business. From navigating complex legal issues – such as contracts, intellectual property, and employment law – to ensuring that all laws and regulations are followed, seeking advice from a trusted attorney can provide business owners with the peace of mind they need to focus on growth and profitability.
But with so many different types of attorneys and services available, how can entrepreneurs be sure they're making the right choice? What are some of the common legal services that entrepreneurs need? And, what best practices should small business owners keep when it comes to their company's legal requirements?
To answer these questions, Trend looked to Chattanooga Chamber members, Grant, Konvalinka and Harrison, P.C. – a local law firm that's served Chattanooga businesses for more than 50 years.
Michael A. Holmes and David M. Elliott, the experts at Grant, Konvalinka and Harrison, offer these top legal tips for small businesses.
Design contracts with business in mind
Well-written contracts help business owners clarify expectations and protect legal interests as the business launches. Creating standard forms and agreements helps businesses govern relationships with suppliers, customers and employees. Attorneys can help anticipate issues that may arise if a dispute occurs with any of these relationships.
Consider using contracts to offer clarity for your most important transactions like scope of work, payment terms, and termination rights. A best practice is to review and update contracts regularly to ensure they remain both relevant and enforceable.
Periodically reviewing and updating contracts is especially important when businesses are undergoing change or expansion – whether that's expanding into new markets, adding products or services, or hiring new employees and contractors.
Create, maintain and update an exit strategy
An exit strategy is a plan that outlines a business owners' rights and responsibilities upon retirement, disability, death or a desired liquidation event.
This aspect becomes particularly crucial when dealing with multiple owners. While you may enjoy running your business alongside your chosen business partner, you may not feel the same way about their family, heirs or estate.
Common exit strategies include restricting the transfer of equity interests, transferring those interests to a partner or family member, selling the business to a third party or simply winding down and cashing out.
We recommend that you address exit strategy considerations at the outset in your operating agreement, shareholder agreement or other governing documents.
Attorneys help address estate and tax planning concerns and carry out their desire to reward valuable employees when exiting their businesses.
Protect intellectual property, including trademarks, copyrights and trade secrets
A valuable asset for most businesses, it's important to protect intellectual property like names and brands by registering marks and domain names.
While there are some common law rights for words, logos, pictures, letters, shapes or any combination of them, businesses can obtain increased protection by registering a federal or state mark – trademark for goods, or service mark for services.
Registration provides an exclusive right to use your mark in relation to the goods and services specified in your application, which courts will generally enforce against infringement or misuse.
Determine the availability of a new mark or brand early in its creation process to avoid committing to a mark that might already be in use.
Original creative works including literary works, computer programs and manuals, should be marked with a copyright notice and copyright applications should be filed promptly with the U.S. Copyright Office for increased protection.
We also recommend using non-disclosure and non-competition agreements to protect trade secrets and proprietary information. These agreements should be implemented for anyone who has access to your sensitive information.
Build accounting relationships
While some business owners are often tempted to manage their business finances alone, this approach could lead to costly mistakes and missed opportunities.
An experienced accountant can offer valuable advice on tax planning – like maximizing deductions and ensuring compliance with state and federal guidelines.
Accountants offer tax services that provide immediate value to businesses by implementing efficient tax planning strategies, which help businesses avoid penalties and audits.
Make sure to consult with a certified public accountant who can get to know your business, during and beyond tax season. Accountants can also help you manage finances more efficiently by creating financial projections, setting budgets, and monitoring financial performances.
Protect against and mitigate risk with insurance coverage
Risk and insurance coverage should be carefully considered when operating a business.
While it is impossible to fully eliminate or insure against all risks, giving careful thought to the types and amounts of insurance coverage needed to properly protect your business is vital.
The risk profile for many businesses today is growing increasingly complex. Relying on purchasing the minimum requirements for liability coverage, property insurance, and state workers' compensation may not be enough.
Business owners today need to consider a variety of different coverages, including cyber, professional liability, employee practices liability, crime and umbrella policies. They should also be mindful of how much coverage is purchased and pay attention to the fine print in the policies – especially terms related to claims reporting and exclusions.
Consider a trusted insurance agent to help navigate and address coverage options.
Learn more here.
* The Chattanooga Chamber’s Leadership Chattanooga class of 2023 shares lessons learned