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Running a business is arguably one of the more rewarding efforts a person can make, but it’s certainly demanding on your time and energy, and there’s obviously risk involved. Even if you build something from the ground up and pour your heart into making the venture work because you believe in the vision, success isn’t promised. However, breaking even or getting by can really be a testament to your approach, and that is perhaps one of the more satisfying outcomes out there.
If that happens it’s natural to focus on the growth and the daily operations since they keep the lights on, but looking after the legal side is just as vital for your long-term survival. Ignoring the paperwork or the compliance requirements is a risk you shouldn’t take at all. It’s true that it’s scary to think about lawsuits or audits, but they’re a reality of the corporate world we live in today. You don’t need to be a legal expert to protect yourself, but in this post, we’ll discuss a few practices you can use to stay on the right side of law planning.
Get Everything In Writing
It’s easy to rely on a handshake deal when you’re working with people you trust or have known for years. We all want to believe a person’s word is their bond, but misunderstandings are more likely than you might expect. It’s much safer to have a contract outlining the agreement so there’s no confusion later on if the relationship sours or if something happens that causes people to refute the agreement terms.
This way you protect both parties by having a clear paper trail. It’s not an insult to the other person’s integrity to ask for a signature on a document either, it’s just good business practice, ensuring everyone remains on the same page from day one. You’ll be extremely glad you have the documentation if a dispute ever arises and you need to prove the original promise.
Maintain Accurate Digital Records
Keeping your files organized is pretty invaluable if you're ever questioned about your operations or finances. This is why many recommend having everything stored digitally, to better locate what you need, as you won't find yourself digging through boxes of paper in a storage room somewhere.
This means you should track invoices, receipts, contracts, and correspondence in a way that makes sense for how you operate. An ediscovery platform can help if you're dealing with large volumes of documents or need to retrieve information quickly during any legal proceedings. Keep up with the backups too, because losing years of records to a hard drive failure or cyberattack could leave you vulnerable.
Separate Personal & Business Finances
Mixing personal and business money is not only confusing but could cause issues with tax and other reporting standards. Opening a singular business account is better then, as it keeps it transparent and makes tax season far less stressful for your accountant, who you might outsource or hire internally once you get to a certain size. You'll also have a clearer picture of how the company is performing financially if you do this.
This separation also protects your personal assets if the business faces legal trouble or debt collection. In general, courts look more favorably on businesses that maintain proper boundaries between personal and corporate finances.
With this advice, we hope you can continue to keep your business watertight from a legal perspective.
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