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4 legal issues to consider when starting a new business

On Behalf of | Jan 6, 2022 | Business formation

Starting a new business can be exciting and terrifying at the same time. You might have the perfect product or service, but if you don’t know what legal issues to consider when starting a new business, then it’s going to be difficult to get your company off the ground.

Compliance with the law is also a major factor when it comes to your business operations. Therefore, you need to ensure that you are well aware of the legal environment that your business operates. Here are some legal issues to consider.

Your business structure

The business structure in place will define your operations. For instance, bookkeeping and tax obligations in a sole proprietorship are different from those of a limited liability company. Your business structure is a roadmap for how to run and grow your new business. A good business structure can eventually convince people that working with you – or investing in your company –  is a smart choice.


Depending on the nature of your business, you may need permits or licenses before you begin operations. The licenses and permits you need for your business will vary by industry, state, location, and other factors. Failure to do so may lead to fines or even a closure of your business. It is advisable to do your research and ensure that you are fully compliant with this.

Non-disclosure agreements

Depending on the nature of your business, it may be in your best interests that you sign confidentiality agreements with the parties you engage with. Since they will have access to your information, you might want to have legal structures in place that prevent that information from passing on to third parties or competitors alike.


Under the California Labor Code, you need to have a workers’ compensation policy in place if your business has one or more employees. You risk hefty fines if you fail to provide insurance coverage for your employees from work-related injuries or illnesses. You may also consider protecting yourself with business insurance to protect your business and your personal assets.

In conclusion, keep in mind that the law is constantly changing. The legal issues you face during formation may change as your business grows. Therefore, it is important to be aware of this and align your business objectives accordingly. It could save your company a lot of time and money.

If you have any questions in regard to starting your own business and need help with any of the steps, please contact one of the business attorneys at Hart Kienle Pentecost. We would be happy to help.