Running a small business is a labour of love but heartache can happen when you encounter legal road bumps along the way. By implementing these five employment and corporate law considerations you can protect your heart (and wallet) from trouble and spend more time focusing on what matters – growing your business.
1. Put Agreements in Writing
Businesses can potentially face legal disputes from business partners and employees. When these disputes arise, you don’t want to be relying only on your memory for details of a verbal contract. By putting your business agreements in writing you can save yourself a lot of uncertainty, trouble, and legal fees.
It might be tempting to use stock agreements available online, but buyer beware! Those agreements might not be up to date with the current law or applicable for your jurisdiction or industry. It is important in any situation to get legal advice tailored to your circumstances. This is especially true when dealing with agreements for new employees, additional business partners, and leasing workplace premises and equipment.
Employment agreements, contractor agreements, shareholder agreements, and lease agreements are all important contracts to have in writing. If you don’t have them in writing, don’t panic! You can always consult with a lawyer on how best to put your existing agreements into writing.
2. Create Workplace Policies
Workplace polices are an important tool in protecting your workplace values, culture, and mission. Policies set the tone for your workplace and communicate expectations to your employees. In addition, policies can be a valuable tool to protect yourself against employee claims. Polices can be used to educate employees on workplace standards and ensure employers have a clear mechanism to correct actions that could result in injury or harm.
Depending on your workplace, having policies might also be the law. For example, the Northwest Territories’ Occupational Health and Safety Regulations requires employers to develop and implement a written policy to address workplace harassment.
So what kind of policies can you implement? Some examples include workplace harassment and violence policies, progressive discipline polices, and confidentiality policies.
Outside of complying with your legal requirements, the policies you implement can be made to fit your business needs and culture.
3. Consider available business structures
There are several business structures available for a new entrepreneur to consider when they are starting out. These include sole proprietorships, partnerships, incorporations, and limited partnerships.
Each business structure has its advantages and disadvantages. It is important for a new business owner to understand what those differences are in order to make an informed decision. For example, the form of business structure you choose can provide you limited protection from liability (such as corporations), or no protection (such as sole proprietorships and partnerships). Consulting a lawyer and an accountant can help you decide which structure is best for you.
It is also important to be mindful of local laws. Regardless of which business structure you choose, in order to legally do business in the Northwest Territories, you will be required to register or incorporate your business with the Corporate Registry Office.
You may find that as your business grows, the type of business structure you initially started out with, such as a sole proprietorship, no longer works for you. This may be the case if you need to hire employees, want to compete for high value contracts, or need to obtain financing from a lender. In that case, you can certainly adjust your business structure as the business develops and your needs change.
4. Seek Professional Advice Early
It’s always easier to stop a smaller fire compared to a fire that has gotten large and out of control. The same is true with legal issues. It is best practice to seek professional advice before you are in a crisis. There are many instances where consulting a lawyer can prevent a bigger issue from occurring. For example, consulting with a lawyer before terminating an employee can protect you and your business from a wrongful dismissal claim.
Seeking advice on preventative measures can stop a crisis from arising. Having the proper agreements in place can clarify your obligations and rights while conducting your business. This can apply to more than just the relationship between yourself and your employees. Where you have two or more shareholders in a corporation, it is a good idea to consider having a shareholder agreement. A shareholder agreement sets out the rights and obligations of the shareholders to each other and to the corporation. It can help with business stability, regulate the management of the corporation, provide dispute resolution mechanisms, set out protections for minority shareholders, and provide rules around share transfers. Shareholder agreements provide predictability for the shareholders as they make business decisions and learn to manage their relationships with each other.
5. Check for Licensing or Regulations that may apply to your Business
When starting your new business, you’ll want to research and be acquainted with any licensing or regulations that may apply to your type of business. A licence that applies to all businesses is a business licence. You will be required to have a business licence for each municipality you intend to conduct business. Other more specific licencing or regulatory requirements for businesses can include:
- Environmental regulations
- Zoning or municipal regulations
- Federal regulations, i.e. registering your business name with CRA and obtaining a GST number
- Food safety and health regulations
- Workers safety regulations
- Trademark licensing
- Tourism licensing
- Importing/exporting permits
- Development permits, etc.
Knowing the laws and regulations you must comply with will protect you and your business from possible fines, penalties or even suspension or closure.
While these five considerations can help to protect your small business, each situation is unique and it is always best to seek legal advice specific to your situation. If you have any questions please reach out to a member of our team at Lawson Lundell, we are happy to assist.
Stefanie is an associate in the Yellowknife office with a practice focused on labour and employment, civil litigation, family law, and child protection law.
Representing clients from all sectors, and from a variety of communities ...
Margaret Lovely is an associate in the Yellowknife office of Lawson Lundell LLP. Her practice focuses on corporate and commercial law working with private businesses and non-profit entities in the North.
Prior to joining the firm ...
Our North of 60 Blog provides commentary on current legal trends and developments, and legislative updates affecting businesses in Northern Canada.
Legal Disclaimer: The information made available on this webpage is for information purposes only. It does not constitute legal advice, and should not be relied on as such. Please contact our firm if you need legal advice or have questions about the content of this webpage.