Time to be Business Minded
A lot of people these days had already decided in venturing to any kind of business one can possibly be able to sustain and most importantly, in order to earn money. Some prefer to go for small business to start by just trying to be safe in case the business will not flourish in the long run. However, even with the scare of economic crisis looming one’s business, there are still a few who risked in taken chances with big business, even if one needs to loan money from their resources and the return of investment doesn’t always guarantee a success. Most people these days usually think only of gaining enough or bigger profits from business, but not all of these people tend to look deeper into the legal issues of the business they own. There are still a few who are already aware of the commercial laws and legal processes of the businesses they put up, but still didn’t do something about it. One of the reasons why some people hadn’t done something about their business’ legality is the lack of knowledge about it, or they just find the processing frantic and take so much time.
In general, the purpose of business law is to guarantee proper supervision and organization of businesses for the benefit of all the people who has a stake in the business, the business owners, and the consumers. Before one decides on putting up a certain business, one has to check first if the kind of product or service the business is offering is considered legal in their state. If not, then one is actually at risk of putting oneself or some people behind bars due to a violation of commercial laws. Many countries all over the world have already implemented civil codes that include a comprehensive declaration of their business laws. Some of these laws also cover the taxes the government will be collecting from these businesses as well as the liabilities of each owner.
A business man can choose the type of structure of the business being developed. Each business structure differs from one another in many aspects like taxation and liability. Taxation may be different among these structures of business and many countries vary on their implementation of this aspect, but in general, there are many tax laws and incentives that are accessible on a different scale among business forms. Liability is the stake the owners of the business render in doing business. It is the legal responsibility of the business as well as its owners to the results and consequences of the business on the community as well as in its environment.
One can choose sole proprietorship or single ownership of the business. This type of structure is usually common among small scale businesses. Another business structure is the called the general partnership where the owners of the business are exceptionally limited to at least two owners. In this business structure, the owners are legally responsible for the business and all the debts it has incurred during its operations. The partnership doesn’t need to be registered in any written formal documents.
Two other forms of partnership are the limited partnership and the limited liability partnership. In the structure of limited partnership, there are two classifications of partnership involved: the General partners who are personally exposed in the business processes and liabilities and the limited partners who don’t participate in the running of the business but offers financial investment into the business. In the limited liability partnership, the entire partner benefits from the limited liabilities under their names. Corporation, on the other hand, is the business structure common among large business bodies. It is distinguished by the separation of the business entity from its owners. Its main difference from other structures is the lasting existence of the corporation and the share transferability is easy. There are some countries, which made rules and restriction on the qualification of the shareholders.
Starting one business may seem complicated and chaotic when following the rules and process. Anyone can always start their own simple business without following the proper process in putting up a business but still the risk of closure of business is high since in the business world, one has to meet all the requirements before a business can actually start operating.
When Money Matters
It’s true that when one is ready to venture out into the business world, he has to consider a lot of factors. Some say there are only 3 important things to consider: location, location, and location. Wouldn’t it be money, money, and more money? Definitely, it is the latter.
When it comes to starting out a business, there are legalities and laws that should also be taken into consideration by any would-be entrepreneur. It starts with the concepts, location, financial support, and risk control. Knowing all of these can really cause a change for the future of the business.
When one is planning to invest in a business, then he must consider some of the basic things:
- The Business plan
This is just a written plan of one’s business ideas. Written here are the purpose, objectives, and goals of the business. The nature or type of business – this could either be a product that he sells or services that he provides. Herein also are the prospective employees and the necessary professionals and personnel that are needed for the business to run. This will include the accountant, lawyer, advisors, and bankers. It is also explained in here the source of funding, the projected income, and the expected expenses. A good written business plan will later be an essential in getting sponsors and loans for funding the business.
Having written the business plan, one can choose on what type of business structure he will take into:
- Sole proprietorship
- Limited partnership
- Corporation
- Business trusts
- Professional associations
- Franchising
Now that the plan is ready and everything is decided, it’s time to take actions on it.
- The Business fund
This is the source of funds for the Business. Unless one is already rich and has the fortune, funding is not a problem anymore. Besides he doesn’t need the business in the first place, right? Well, if that is not the case, one primary source of the fund is the savings from many years of employment. The other source and the most common one is from loans. Getting loans from the bank, lending institutions, and rich people are the popular options. Last option could be the Capital investment, where one can loan money from wealthy individuals and make them co-owners.
- The Business Name
Choosing a business can be tricky sometimes. When choosing a name, owner should make sure that the business name doesn’t have a duplicate or similar names to those that were already registered in the state for it can be a reason for lawsuits. One way is to choose a name that manifests the structure of the business. For example, putting the word “Corporation” in the name when the business is a corporation or putting the owner’s name if it is a single proprietorship business. To avoid confusion and duplication, the owner may check the list of business names in the state or perhaps make the necessary inquiries in the legal counsels.
The three important legalities mentioned above are just few of the things to consider when putting up a business. If it is done properly, the business will surely grow and prosper. However, it is not at all times that the business will be sailing smoothly. Owners should be vigilant on the common issues that may strangle their business such as:
- Taxation
These are issues regarding business taxes and employee taxes, as well as, other incurring payments and tax exemptions.
- Risk and control
These are issues regarding business risks and how to predict and prevent them; this may also include damage controls and sustainability plans.
There are 2 types of risk: tort risk and contract risk. Tort risk is the intentional risk to the owner or the business property itself. Contract risk includes financial risk in the form of vendors and customer risk.
- Liabilities
A business usually has liabilities aside from the assets it has. Examples of these are general liability, product liability mortgage, and automobile liability.
- Maintenance
A good business should have maintenance plans in order for the business to survive in the world of competition and change. A business must be able to adapt to changes for it to survive.