With the American economy rebounding strongly after the COVID-19 pandemic, more entrepreneurs and business-minded individuals are pursuing new ventures. Understanding business law can be beneficial for your physical and intellectual property. If you are interested in being a part of this period of high commercial activity, please note that asset protection has become more crucial than ever, so you should take the following steps during the startup phase to guard your business assets and protecting your capital investment:
Understand the Concepts of Business Law
As a business owner, you will be personally liable for the debts and obligations of your business venture. If your business gets sued or goes into debt, your personal assets could be at risk; however, this is a risk you can prevent with the right corporate structure. Most legal jurisdictions across the United States offer business incorporation through limited liability companies or corporations that effectively create a separate legal entity from yourself. This will limit your liability while operating the business, which means that your personal assets will be generally protected from business debts and lawsuits. The statutes and regulations of some states offer more protection than others; you can inquire with a law firm about registering your business in states such as Delaware and Nevada, where the legal climate is more corporate-friendly. While you should still try to learn as much about business law for your own benefit, it is still important to retain legal representation.
Understand the Concepts of Intellectual Property
Your business idea, brand name, logo, and even some of its unique processes are intellectual property; as such, they should be treated as assets of substantial value. Intellectual property protection like trademarks, copyrights, and patents helps you prevent others from copying your ideas or using your brand without permission. This protection can give you a competitive advantage by allowing you to capture the full value of your protected creations.
Use Non-Disclosure Agreements
Have your employees and external business partners sign non-disclosure agreements (NDAs) to safeguard confidential business information. NDAs legally bind employees to keep secret any sensitive information they encounter during their work, including trade secrets, formulas, inventions, and customer data. This helps prevent unauthorized disclosure of your intellectual property. Don’t assume that NDAs are only useful when employees leave the company; they can be structured so that they can lead to immediate termination without legal repercussions when employees leak confidential information.
Implement Strong Intellectual Property Protection Measures
You want to control and restrict physical access to sensitive paper files by limiting who can enter specific areas and using locked cabinets or secure rooms. Some law firms and private investigation agencies use isolated “air-gapped” computers or intranets that are closed off from internet connections; in these cases, physical access should be closely monitored and enforced through a chain of custody. You also want to secure electronic data and digital files with strong password policies that require regular updates. Be sure to use encryption for sensitive data when it is stored or transmitted. Keep in mind that industrial espionage hackers seek to steal valuable intellectual property like trade secrets, formulas, and designs; when they penetrate business networks, they don’t limit their criminal activity to high-profile targets because they cast wide nets to see what they can catch.
