Running a family business often takes more than showing up to make it a success. Times have changed, and so should you if want your business to make it in the 21st century, otherwise it’s just as good as defunct. Now more than ever, it’s important to pay attention to the legal side of the business, which when handled, provides the right footing not only as protection the business but also ensuring growth when everything else fallsinto place. Here are the important legal mattersnot to miss when operating a family business?
Get a formal business structure
Creating a formal structure should be among the first things taken care of when the businesswas established, but you might want to sit down and revisit this with a legal advisor. Most family businesses seldom have the structure to guarantee form when they start growing. The structure ensures that your business operates the way it should and that it benefits those who run it, in this case, the family.
A dilemma familiar to most family run businesses is poor succession planning. It’s not newto encounter companies that get entrusted to the “favorite nephew,” or the “very reliable Child.” This, in fact, is prevalent and happens without putting much thought into it. Keep in mind that a family business should be treated like any other business, and if it means that you need to bring someone in from the outside to help, and then do it.
A succession plan often spells success, compared to just tossing massive responsibilityto someone you’re closely related to, but doesn’t have a clue as to how the business runs. Drafting an operating agreement with the help of a legal advisor settles this concern and puts other provisions in place that further strengthens the business along the way.
Protection from outside elements comes from obtaining Intellectual property, Trademarks, and patents. To be safe, don’t assume safety, consult with a legal source.
Disputes and family affairs
Disagreements on the family side sometimes spill into the business, this is typical forfamily-run businesses, and it’s something that you should plan for since the avoid route is seldom successful. While we cannot be of much help with resolving family related concerns, we’d like to be able to support the side of the business. Keepingthe business end sandboxed from family matters is one way to keep heads from rolling. This often means having clearly defined roles carved out to guide everyone and the company towards success.
Secure appropriate licenses and permits
Whether you’re just starting out with the family business or carrying on from somebody thatrecently stepped down, getting the right licensing and permits saves thecompany from being scrutinyfrom the authorities. There’s nothing more inconvenient than receiving a letter of notice from the state saying that the firmis suspended, or worst, being shut down because you failed to get the right permits and licenses in time. Take care of this ASAP, know what licenses you need, file or renew them on time, every time.
While the internet is perhaps the cheapest source of advice for each of the scenarios above, it also presents a time black hole. You’ll go for days searching before finding legal advice perfectly suited to keep your business on the safe side of the law. As such, working with Legal GPS on your side beats any other option, saving you both time and money.