Introduction

The following are dominant issues arise in the early pre-operational and operational stages of business: business format, intellectual property, government regulation of business, contracts and agreements, taxation, business and product liability, employee relations, financing and choosing a lawyer. Each category can be further described as follows:

Business Formats: What internal structure or form of business organization should be adopted by the owners of the business? The formats most commonly discussed in respect of the start-up business include the sole proprietorship (doing business on one's own behalf), partnership (two or more persons doing business together with a view towards making a profit), and the corporation or limited company (creating a separate legal personality for the purpose of doing business). Some clients may also carry on business under a franchising or licensing agreement, which may also involve the use of any of the other business organizations mentioned above.

Intellectual Property: A business is often centred around a novel idea or product, such as a new machine, process or system. Methods of protecting the unique intellectual property in such businesses may include patents (for machines and processes), copyright (for literary works and other forms of idea expression), trademarks (for words and symbols identifying products or services in the marketplace), industrial designs (for distinctive shapes and patterns), and trade secrets and confidentiality agreements (for maintaining the security of unique or novel ideas outside the government regulated systems of protection described above). Each has their own unique characteristics, requirements and government registration systems. The costs for each type of protection also vary dramatically.

Government Regulation of Business: The impact on business of government regulation at the local, provincial (state), or federal level is an area of increasing importance and complexity. Licenses and permits, land use and business zoning laws, environmental and consumer protection legislation and the laws relating to self-governing professions and business activities should all be considered.

Contracts and Agreements: Modern businesses "float in a sea of paper", much of it generated internally, for a variety of purposes including buying and selling products, agreeing to provide or receive services, and promising to pay (or pay back) funds used to finance business activity. Understanding the contracts and agreements that are used on a day to day basis in the business, as well as recognizing the significance of major contracts and agreements, forms a very important element of the business owners overall understanding of his legal affairs.

Taxation: The taxation of business income, whether earned as a sole proprietor or through a partnership or corporation, is a topic of considerable interest to the entrepreneur at every stage of development. At the start-up stage however, where cash flow may be restricted, proper tax planning and an understanding of the basic tax issues facing a particular business activity are crucial to a successful launch. The manner and rates of taxation often impact dramatically on the business format selected.

Business and Product Liability: In an increasingly litigious society, the question of who is responsible for personal injury or economic loss as the result of the use of defective products, or the negligent provision of services, is becoming more and more important. It is, therefore, necessary to consider not only the standards of conduct and behaviour which must be adhered to in order to minimize risk, but also what contractual, insurance and business format options are available in order to reduce or eliminate potential personal liability.

Employer-Employee Relations: Businesses must develop strategies for hiring, training and compensating employees. Other issues, including the characterization of workers as employees or independent contractors, the agency relationship between employees and their employer (which will determine liability for employee acts), and the impact of employee protection legislation on the master and servant relationship must all be considered.

Financing: Finding capital to start a business is one of the most daunting tasks facing the entrepreneur. Whether the business will use equity financing (by issuing shares in compliance with prevailing corporate and securities legislation), bank or private debt financing (including the provision of personal guarantees and other forms of security), government grants and subsidies, or a combination of all three, the legal issues relating to financing must be addressed if the business is to have a chance to succeed, and those who take the risks protected.

Choosing A Lawyer: The process of selecting a lawyer to provide advice, opinion, and services to a small business is a mysterious exercise to many business owners. The entrepreneur must learn to come to terms with the mystique, myths, and realities of the legal profession while developing a logical strategy for reviewing, rejecting, and ultimately selecting the right lawyer for a particular venture.