Legal issues when starting a business
In essence, starting a new venture (start-up) can be both exhilarating and thrilling. But it can also be cumbersome since various obstacles originates while starting a company from basics. Such hurdles may be statutory such as incorporation of a company or may relate to other aspects of business such as procuring financing.
It is often seen that people miss or forget some fundamental steps while processing their business incorporation and growth. Fear not, following key points will help you guide through the legal pits towards setting up of your business:
Incorporate or form your business the right way
One of the very first decisions that you must make is in what legal form to operate your startup business. Choosing the right business entity, as well as the state to register in are crucial decisions. By choosing to incorporate, your company becomes a separate legal entity that conducts business, generates incomes, and assumes its own tax and legal liabilities. Another common mistake is to choose the wrong business entity once you decide to incorporate it. You should consider speaking to both an attorney and a tax advisor to get to know what’s best for you.
Have an intellectual property strategy
One needs to protect its core intellectual property (IP). The role of intellectual property is turning out to be extremely crucial in today’s world. It is important to work with the right IP experts to file copyrights, trademarks and other forms of IP and even plan your future IP strategy. It is also crucial not only to create IP, but also to monetize and protect ones IP rights, and the right legal partner can make a huge difference in all these areas. For instance, you can acquire trademark rights through the consistent use of a mark even if the trademark is not registered.
Lack of employment documentation
Business startups often encounter problems when they do not maintain adequate employment documentation. Startups should prepare a core group of employment documents that is to be signed by the employees. Through these documents you can clearly display your employees’ responsibilities, rights, and obligations. Employees usually know a lot about your company, so one should take steps to keep its confidential information safe and signing of a non-disclosure agreement will definitely protect your startup’s confidential information from being shared to any third party.
Have agreements in writing.
Most of the startups are ignorant about this aspect. It’s best for a startup to have its agreements in writing because skipping this step can have significant consequences. A written contract ensures that all of the terms of your agreement are documented. If a disagreement arises, there will be a document that the parties can refer back to in order to get the relationship back on track. In short, a solid written contract can save money and strengthen a business relationship by helping to avoid litigation altogether.
Identify the right law firm for your startup
It’s astonishing that almost half of the small businesses have never consulted with a lawyer. With the advent of internet and digital platforms, to search and identify legal firms/advisors seems like a breeze. It is essential that you work with a firm or individual who understands your business and has prior expertise in the sector you operate in. A good lawyer will certainly be a competitive advantage for business owners who have to manage both opportunities and potential risks.
TO CONCLUDE, there’s so many legalities involved in starting a company. Some legal issues are more important than others, depending on facts specific to your company. When you’re in the hardship of startup, it’s all too easy to make one of the mistakes. All startups face challenges, but some can be avoided with careful planning. Hence, it’s always a good idea to keep legal concerns in mind as an early-state startup and make sure that the basics have been taken care of.