Small and medium-sized enterprises (SMEs) are not only looking to boost their finances by maintaining their financial health and increasing their profits. One of their biggest aspirations is to grow and expand their business over time. When the right time comes, they consider pursuing a partnership, merging with other companies, or expanding their operations.
But when it comes to growing and expanding your business, you must have some legal considerations in mind. Doing so helps you avoid business conflicts, legal ramifications, and even a complete shutdown. With the legalities in mind, you’ll have successful business growth and expansion.
That said, here are essential legal aspects to consider when growing and expanding your business:
1. Business permit or licensing
For your business to be legitimate, you must secure a business permit or license. The same applies to growing and expanding your business. For instance, you must update your business license if you’ll change your business structure from a sole proprietorship to a partnership. The same applies if looking to open a new branch in a particular location. As such, be sure to ask the local authorities what the legal requirements are and work with a legal officer for a successful business update.
2. Intellectual property
Intellectual property refers to the protection of intangible assets of a business from external use without proper consent. It may include your trademarks, patents, franchises, and even design rights. When growing and expanding your business, you want to ensure your IP remains in place. When merging with another company or expanding to a new site, ensure that your intangible assets remain associated with your business and protected from outside utilization.
3. Employment legalities
Businesses that are looking to grow and expand will most likely need additional headcounts in their workforce. As such, you must stay on top of your employment legalities when hiring new employees. On top of your considerations are the contracts that must be legally binding. But apart from just compensation (employee salaries and benefits), consider laws concerning workplace health and safety, disciplinary actions, and even work discrimination.
4. Real estate property ownership or lease
When it comes to business growth and expansion, you must not neglect your real estate property. Whether investing in a new property or renting a commercial space, ensure that the property acquisition or lease is within legal bounds. That said, have your legal officers be highly critical in your real estate. For instance, if you seek funding from a mortgage lender, be wary of the loan agreements. The same is true for the property lease contract if renting out a commercial space for a year.
5. Mergers and Acquisitions (M&A)
Mergers and acquisitions are a common approach in business growth and expansion. For the uninitiated, M&A refers to the consolidation of businesses and their assets. It is made plausible through different types of financial transactions. As the process can be complex, it’s best to hire an M&A advisory service. That way, the process will be fair and square to all stakeholders or parties involved. Most importantly, you can ensure that everything is within the bounds of the law.
6. Terms of service or sales contracts
As far as business growth and expansion are concerned, you must set the terms of service or sales contracts in place. For the most part, your business will be offering the same products or services. However, it’s common to make some changes in the process of growing and expanding your business. As with launching a new product or offering a new service, you must have your legal officers look into the contracts. That way, you can make your consumers or clients satisfied while protecting your own business.
7. Tax obligations
A very crucial part of business growth and expansion is tax. As you can see, you have tax obligations to keep up. As much as possible, be sure to stay on top of your tax responsibilities. However, these can change if and when adding new employees, opening a new site, or expanding your business. As such, it’s best to hire a tax specialist who can help you become compliant with your tax obligations. This person will prepare your taxes all your round and know what to do come the filing season.
Grow and expand your business
Growing and expanding your business isn’t a walk in the park, as there are many business considerations to make. On top of these considerations is the legal side of your business. That said, be sure to consider the vital legal aspects outlined above—from the business permit and M&A to tax obligations. With all these in mind, you’ll set your business on the right track towards successful business growth and expansion.