Plenty of people think that starting a business is easy and immediately profitable. In reality, running your own business can be challenging as well as stressful. As you prepare to enter the world of the entrepreneur and try to carve a niche for yourself, you need to recognize that there are several legal aspects you need to be aware of. Underestimating these costs can lead to a decline in revenue and even business failure. Here are just a few of the legal costs that business owners need to be aware of.
Cost of settling criminal disputes
Offices, directors and employees can face criminal disputes. Criminal defense attorney information gives an idea of the costs businesses have to face in these situations. This is important as an investigation can destroy the image of a business in the eyes of its customers that was built over several years of hard work. Some of the disputes that can take place include commercial fraud, economic espionage, banking fraud and security violations.
Obtaining a patent in the U.S will generally cost at least $5,000 and can run into the tens of thousands depending on the type. Further costs are incurred when an attorney is hired to prepare the document, as it requires complex details. The attorney is also going to charge for searching, reviewing and stating whether a particular item can be patented or not. The search fee can range from $600 to $1,000. If a patent is infringed, the business needs to defend its inventions in the court. Technological patents are forcing many companies to go to court, with the biggest example coming in the form of Apple and Samsung. The legal costs of defending the patents are quite high.
The legal cost of insurance depends upon the location of the business, revenue, number of employees and whether the business has faced any legal claims in the past. Types of insurance for businesses include property, liability, health, business interruption, malpractice, error & omission just to name a few. Each of these offer different plans and protection coverage for different situations. For example, property insurance covers damages from events like theft and fire while business interruption insurance will cover the lost revenues due to certain events.
The cost varies whether the business obtains a local, federal or a state license. A federal license is required by businesses such as agriculture and alcohol, which requires government regulation. State licenses are also required for certain professions, while local licensing is normally required just to run a business in a given area. The fees for obtaining licensing will vary depending on the business, location and just how heavily regulated it is. They aren’t one-time expenses either, as most have to be renewed at periodic intervals. Just having an incorporated entity will generally require annual renewals of the incorporation certification.
As you can see, it’s not always as simple as saying “I want to start a business”, then poof! you’re ready to go. It often takes lots of planning, and not just for the obvious either. You need to be sure that your assets are covered and even have contingencies in place even if it is “just in case”.