Top 4 Legal Steps When Opening a New Business in South Dakota
Opening a new business is potentially perilous but can also be very profitable. However, there are some procedures that a new business owner can adopt to reduce their liability if they are named in a lawsuit. Here are a few common steps to take when opening a new business to avoid a potentially costly lawsuit:
Creating a Business Structure
If you own the business in your own name, you could be personally liable for any loss that the business incurs. This potentially includes debts to contractors or lawsuits from plaintiffs. he most common precaution against this danger is to incorporate your business. The process may require extra payments and paperwork initially, but will save substantial time and money in the future. Starting a business without a corporate entity to minimize your personal risk could lead to creditors going after your home, your assets, or other valuable property.
Once you have incorporated your business though, you must maintain the distinction between business and private assets. If you combine your personal and corporate assets though, a court may order the corporate veil dissolved anyway. Consult with an attorney to find out how to set up a corporation to protect your business and your assets.
Securing Enough Financing
Starting a business is a big investment. You will need to pay employees, vendors, suppliers, and anyone else who requires regular or upfront payment. The financing should be large enough to safeguard any shortfalls. If you are buying a pre-existing business, a change in ownership may trigger the end of old contracts, including vendor contracts, employee contracts, or old leases. If that occurs, you may need additional time and capital to either renew those old contracts or find new business relationships to fill the void.
Maintaining Written Policies and Procedures
Personal injury is one of the most common claims in a lawsuit. A business is considered negligent when it was supposed to take a certain precaution, such as putting up warning signs or safety cones, but failed to do so. One potential defense to such lawsuits is to have detailed written procedures for employees to follow. New employees should sign acknowledgment forms and be required to review employee handbooks regarding best practices on preventing injuries. Policies can cover topics ranging from procedures for trip and fall accidents to third-party criminal incidents.
Drafting Non-Disclosure Agreements
A startup will need to keep its proprietary information safe from potential rivals, but still available to employees to share. Non-disclosure agreements are essential to ensure that your valuable work will remain safe from disclosure. Non-disclosure agreements need to be specific enough to enforce and should include the employee’s name, the information that is to be protected, and a potential expiration date.
Should I Hire a South Dakota Business Lawyer?
Opening a new business can be complex enough without the threat of a lawsuit. It is a good idea to hire a South Dakota business lawyer for help whether you are starting, merging, or dissolving your business. There are many different types of laws and regulations that apply when running a business. A local South Dakota business lawyer can represent you in court and with any negotiations over legal matters.