Business is an individual profession where economic activity is concerned. The legal practitioners often find many cases which arise out the silly mistakes of entrepreneurs; and hence every person who is really interested to run a business newly, should avoid such legal mistakes. It’s so important to keep your new business lawfully sound and secure.
This writing highlights the important legal issues concerning the business formation in the following ways –
a)Obtaining a Business License: It is an obligatory task for every new entrepreneur to obtain a business license from the proper authority to sprint a business in respect of business nature. In most cases, business licenses are comparatively inexpensive. But operating a business without a license can be more expensive. So, make sure that you have a valid license before operating a business – unless you have lots of cash on hand to pay a fine.
b)Incorporating Business as early as possible: In most cases, the new entrepreneurs have no idea about the legal benefit of incorporating a business, and thus, they avoid doing so. But, by choosing to incorporate, your company becomes a separate legal entity that can take advantage of different benefits like reducing your tax liability and protecting your personal assets from any liabilities incurred by your business if your company gets sued by a creditor or client. Hence, incorporate your company early to take advantage of these benefits.
c)Preparing Agreements, including a Non-Disclosure Terms and Conditions: A large number of new entrepreneurs think that all the partners have bona fide aim and there is no necessary to compose a written Agreement. But, it is true that you may not be thinking about divorce on your wedding day. Like that, you cannot imagine when the conflict between the business partners may arise. Your contract and agreement should state the basic terms of the job and the payment details as inserting how and when owners can sell their share of the business, how much they should be paid for their shares, and who can buy an interest in the company. Contracts should also obligate employees or subcontractors to maintain confidentiality about your business by non-disclosure terms and conditions to ensure people doing business with your firm would know that all trade secrets and/or business plans are protected information. Non-Disclosure Agreement may include- research and developments, internal communications, client lists, marketing plans, private information held by human resources, and any other business or employee information et cetera.
d)Protecting Intellectual Property: There are four types of intellectual property: trademarks, patents, trade secrets, and copyrights. Every businessman should have a key aim to protect his/her company’s intellectual property lawfully. Just think about the circumstances that, one day you found out someone had already trademarked the product or brand you have put so much time into developing it. On the other hand, your company logo is a unique part of your company’s identity. As your business grows, your logo rises in value as it represents your company’s promise to your clients. If you don’t legally protect your logo, anyone can use it to gain benefit illegally.
e)Getting a Tax ID Number: It is a good idea to obtain a Tax ID Number such as Business Identification Number (BIN)or Tax Identification Number (TIN) from the National Revenue Board. A BIN/TIN works like a Social Security Number for the business. It is not the same as your Business Registry Number. But, in most cases, the Business Registry allows you to register for both your business registry number and your BIN/TIN at the same time. A sole proprietor or general partnership operating without employees does not need a BIN, but they may choose to get one.
Now, at ending, we want to put a message to the new entrepreneurs reminding that, make a plan for your business carefully and secure your firm lawfully. A famous American lawyer Adlai E. Stevenson quoted that – “Law is not a profession at all, but rather a business service station and repair shop.”
Written jointly by –
Sultan Mohammad Wohid and Houssain Al-Ashkari
The writers are Advocates, Supreme Court of Bangladesh.