If you’re a proud owner of a small business, you know the amount of hard work it takes to develop and establish your brand. Your small business is your baby, and you are ready to protect it with everything you have.
But one mistake that many small business owners make is neglecting the legal side of their new business. Not protecting your growing business can be detrimental, especially in the long run. To make sure that doesn’t happen, here are some tips to protect your growing business:
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Register the business
Almost all small businesses start as a hobby or a side hustle before they grow into something bigger. But to make the business official, you must register it.
Customers prefer working with someone who treats their business as a legitimate business instead of just a hobby. Registering your business is proof that you are serious about the job.
A registered business also means that you can apply for loans and grants. Of course, just like any other business owner, you also want to expand your business, and you need money in order to do that.
And finally, a registered business means you get an employer identification number so you can open up business bank accounts.
Find the right people
For small businesses, every hire is important, which is why you should be really careful when hiring someone. Even if you hire someone temporarily, make sure you do temporary checks to ensure that the individual is the best fit for the role. As a budding business, you want someone who can adapt and blend in with your team and is willing to take up multiple roles to help the business expand.
Don’t neglect contracts
Contracts are essential for all businesses and define the agreement terms between your customer and business and protect you in case of problems. Small business owners are particularly reluctant about putting their agreements in writing. They often have the perception that written contracts will offend other parties, or they don’t think issues will arise. But in reality, contracts help you prepare for any future disputes or issues.
Make sure you have written contracts instead of handshake deals. Remember that the latter doesn’t offer any protection, and you don’t want to leave the business you worked so hard for in the hands of a poorly written contract. Hire an attorney to draft a contract to your business needs so that your business is safe in case of issues.
Keep finances in order
While you might have started the business with personal funds, it’s essential that you establish a separate bank account for the business. Doing so helps protect your personal funds in case someone files a lawsuit against your business. Without a business bank account, you’ll have to use your own funds to pay for damages.
A separate bank account for your business also lets you track your business expenses and plan a budget accordingly. If you don’t separate the account, then your statement will include not only legitimate business expenses but also charges for vacations, groceries, and other personal expenses. Mixing personal and business finances makes it difficult to differentiate between the purchases made for yourself and your business, which can also result in fewer tax deductions.
Protect your business today!
Statistics show that roughly 20% of new businesses fail just within the two first years, while 45% fail during the first 5 years and 65% during the first 10. Only a quarter of new businesses last for over 15 years, and if you want to be among those, make sure you follow the tips mentioned above!