TIPS FOR BUSINESS OWNERS : HOW TO AVOID MINEFIELDS
Running a business is often exciting. But without the right advice, it can also be a minefield, especially concerning legal matters. Prevention is always better than cure.
The following top 10 tips aim to guide you through the minefield:
1. Don’t Put Your Assets At Risk
Are you running your business with your partners?
If so, are you aware that under Singapore law, all partners are jointly liable for the debts and obligations of the business?
If your business encounters any problem, not only will your investment in the company be at risk, but all but your assets will also be at risk. Depending on your business structure, it can help avoid liability – private limited company, limited partnerships, etc.
2. Put It In Writing
All your business agreements must be in writing.
It is often difficult, if not impossible, to enforce an oral agreement. You may have no recourse for compensation or legal action if problems arise. So make sure all your contracts are written to give you flexibility and protection.
3. Get Proper Legal Advice Early
Different lawyers specialise in different areas of the law.
You must find the correct lawyer to help you. Every growing business needs a business lawyer since they are experienced in representing start-ups and emerging companies. The amount you pay for an early advice is usually substantially lower in the long run since it saves you time, aggravation and money.
4. Spell Out Your Terms and Conditions
Cash flow is the lifeblood of any business.
Make sure to spell out your terms and conditions (e.g. terms of trading) to all your customers. This way, you will not be at risk of being paid as and when the customers feel like it.
5. Keep Up to Date With The Law
The scope of business law is extensive; as such, no business owner can be expected to be well versed in every aspect of business law. However, it would be best if you had an essential awareness to help keep yourself out of trouble. A basic understanding of the following topics is vital:
- basic contract rules
- major employer-employee laws (e.g. CPF contributions)
- regulations of your industry
6. Keep Employment Contracts Clear And Simple
It is essential to set out your expectations and rules for your employees.
No employer/employee is expected to be an expert in employment law.
Ensuring your employment contract is easy to understand would be helpful.
7. Protect Your Intellectual Property
Do you have a secret formula for your product?
Do you think your competitors would love to get their hands on your secret formulae?
If so, you must take steps to ensure that your “secrets” are protected. Such protection includes trademark registration, confidentiality agreement and non-competition agreements.
8. Keeping Proper Corporate Records
Small businesses are notorious for failing to keep records. Failing to maintain proper or improper records can create ACRA and IRAS problems. This may also result in personal liability or even hinder your ability to raise funds.
9. List Down Your Rights & Responsibilities
If you run your business with your partners, have you consider what would happen if any partners left the company by choice or otherwise?
Partners or shareholders often fail to sit down and list their rights and responsibilities.
When a problem arises, this often results in costly litigation fees, which drain parties financially and mentally.
Such problems can be avoided by having an agreement which deals with the following issues:
- how much capital must each person contribute?
- what happens if the business needs more money?
- what happens if one person leaves the business?
- what happens if one person dies?
10. Getting Involved In Litigation
Litigation fees can be astronomical. You should always seek your lawyer’s advice for options such as mediation or arbitration to resolve the matter.
If, on the other hand, a suit is brought against you, call your lawyer immediately. Do not attempt to respond without your lawyer’s advice, especially since the first response usually sets the tone of the proceedings.
Having difficulties putting these tips into action? Skip the hassle of waiting to make an appointment with a lawyer. We offer video consultations via Lawyer Anywhere so that you can get the help you need. Contact us today to get started.