Legal Consideration when Expanding a Business 2 years ago

A growing business is an excellent sign that everything is going well and that the future is promising. 

However, there is a common misconception that once a business's legal structure is in place, everything is taken care of, and companies can proceed with their expansion strategies. 

When in reality, there are additional legal requirements when scaling a business that several entrepreneurs tend to ignore.

Here are Legal Consideration when Expanding a Business

New business permit. 

Growing a business may require registering new permits and updating other legal documents. For instance, if you started as a sole proprietor and eventually found a partner to help you scale your business, you will often decide to put up a corporation instead which requires a new business registration. 

You might like to draft founders agreements or partnership agreements to ensure your rights and responsibilities. Meanwhile, you may want to change your business structure. In that case, there are corresponding requirements you will have to accomplish. 

Employment Regulations.

Several startups begin with few employees or partners. Still, once a business decides to expand and hire employees, as an employer, you will be required to follow labor laws and provide government-mandated benefits. In this case, you will have to draft employment contracts that will serve as an agreement between you and your employees. 

Contracts and Agreements

As your business expands, you'll encounter numerous deals and agreements with partners, suppliers, and even your employees. Any form of transaction may already require a formal or written agreement which will result in a ton of paperwork. Examples of contracts are:

• Service contracts

• Partnership Agreement

• Employment Contracts  

• Confidentiality and Non-disclosure agreements

These contracts become invaluable when you are owed money and/or the other party does not comply with their obligations.

If you need to draft a contract, consult with our legal experts or check some of our contracts here.

Trademark Registration

This may no longer be required for those who already have their trademark registered and intend to keep it the same. But if you started a small business, you will have to ensure your trademark is your own and that someone has not yet registered them to avoid unnecessary rebranding.

So if you created your logo using free software like Canva, you will eventually have to register them to protect your brand. 

Establishing Founders agreement. 

This may seem unnecessary, however a founders agreement is of utmost necessity when scaling up your small business and ultimately establishing it as a partnership or corporation. It will define each founder's responsibilities, roles, and rights, especially now that you'll be handling a more extensive operation.

Renting or Leasing a Property

When businesses expand, their need for new space increases. As an entrepreneur, you should find a larger place for your employees and business operations. Find a place that meets your budget and financial capacity.  

To have an idea, you may read, 'Is it better to Rent or Buy an office space?' 

Taxation 

As you change your business structure, you'll also need to update your tax compliance, as there may be different requirements. Also, if your business is registered correctly, you will be able to avail or qualify for certain tax incentives, which you can further discuss with our legal experts.

If you manage to reach a point of expansion for your business, then that means you could overcome the challenges that came when you started it. While it is exciting to keep growing your business, considering the legal factors is as important as forming a business strategy. 

You can check Digest.ph for more startup resources to help your business.