A legal plan for a small business should consider all the activities in the business that might have legal implications. There is no particular format for a legal plan. Simply list in a notebook, the legal issues you foresee and how you plan on addressing them. Here are some legal issues you may wish to plan for:
- The legal structure for your business
- The federal, state, and local legal requirements for operating a business
- Selecting a lawyer
- Business succession planning
- Bankruptcy
- Crime
- Discrimination
- Debt Collection
- Computer Fraud and Abuse
- Intellectual Property
- Labor and Employment
- Landlord and Tenant
- Personal Injury
- Workers Compensation
Obviously, the first legal decision that needs to be planned is what the legal structure of the business will be. Consider while you are making that decision and planning how to implement it, that you may want to change the legal structure in the future. For instance, if you are planning to start as a sole proprietor, you may have a goal of growing enough to eventually "go public", which would require a different legal structure. You don't need to plan how that change would occur, but you may wish to plan when it would occur. You might, perhaps, set a goal of a certain profit level or production level for when you would "go public". Stating that goal in writing should be a part of your legal plan so you can monitor your progress towards it.
Your planning for implementing your initial legal structure should include whether you will want/need an attorney as an advisor or resource, how you set up the legal structure you have chosen, what the federal, state and local reporting and tax obligations are for that legal structure, and what other management issues are involved in the legal structure you have chosen (for instance, if you incorporate, you will need a board of directors). Additionally, there may be legal planning that you need to do to safeguard your name and/or trademark for your business.
Once your business is operational, there will be ongoing legal issues that need to be considered from the list above. Some will be ones that you will want to touch base with regularly, such as federal, state and local regulations. Others will occur only under specialized circumstances, such as going from a business with no employees, to one with at least one employee.
Include your legal plan as part of your business plan. While it may not be commonly included in most business plan outlines, it will impress funders that you have these bases covered.
