When acquiring a business.
Seek legal advice before you sign anything or make any commitments. At the very least, consult with a lawyer for 1-2 hours to learn about the buying process and how a lawyer can help minimize your risks and liabilities.
When choosing a business structure.
Know your options and understand the advantages and disadvantages of each. Learning about the differences from both a legal and accounting/tax perspective is the best place to start.
When changing business structures.
Identify the tax consequences of changing from one structure to another (e.g. transactional and income taxes). Don’t be surprised to learn that taxes apply to a transaction regardless of whether or not the recipient pays anything.
When incorporating a company.
Avoid incorporating on your own unless you use a reputable self-help resource.
When partnering with others.
Clearly set out your rights, duties, obligations and restrictions as an owner, and appropriate exit strategies in a written agreement (e.g. a partnership agreement or shareholders agreement).
When investing in a business.
Conduct financial and legal due diligence before investing in a business. Proper legal due diligence can reveal otherwise unknown liabilities of the business that could change your risk assessment of the investment.
When leasing real estate.
Make sure your intended use of the premises is permitted under applicable zoning, and take the time to read and understand your rights, duties, obligations, and liabilities as a tenant under the lease before signing.
When hiring employees.
Put the employment arrangement in writing. Clearly set out the key terms of employment (e.g. duties, compensation, and benefits) and the right to terminate, including how much prior notice must be given. Consider including non-disclosure, non-compete, and non-solicitation restrictions and an assignment of intellectual property rights.
When obtaining liability insurance.
Speak to an insurance advisor regarding liability coverage that will protect both your business and personal assets. Also, if you have a corporation, don’t assume your personal assets are protected from all types of liabilities.
When choosing a lawyer.
The best way to choose a lawyer to use is to get a referral. If you can’t get a referral from someone you trust, you can contact the Canadian Bar Association’s Lawyer Referral Service.