By: Annabelle Short
When it comes to starting a business, you might be a pro…
But, what about when it comes to working through all the legal issues you must consider as an entrepreneur when launching your start-up?
The world of business can get complicated quickly when you add in all the laws that apply – liability, finances, trademarks…
The list goes on.
Most entrepreneurs get caught up in the midst of starting their business and quickly forget about the legal aspects that need to be considered.
To ensure that you avoid the negative repercussions of an avoidable mistake, there are a few common legal issues you should be aware of:
1. Non-disclosure agreements.
It seems like a given – don’t talk about anything that is considered “top secret.” But, it isn’t that obvious to everyone and to some, it just isn’t a priority or even a concern…
Particularly those outside of your business who might become involved with you in some way.
Anyone who interacts with your business – from the business side, not your clients – should sign a non-disclosure agreement (NDA) to ensure they won’t run and share your ideas with the competition.
2. Future of the business – the what if’s?
Life happens. Unfortunately, sometimes people leave this world too soon. If that is the case, what will happen to your business?
It is important to invest in a will kit to ensure the assets of your business are protected and have a designated owner should you become unavailable.
Have your attorney send your will kit to the post office for easy pickup.
3. Vesting.
Finding the right co-founder for your business is quite the task…
Who do you trust? Who will make a good fit and lead your business in the right direction?
It is important that you have a similar work ethic and timelines for investment – you need to have chemistry.
Instead of getting all your shares at once, once option to consider is vesting. Your equity can be vested over time so that if you don’t have the chemistry you thought you did, there is a fair solution.
4. Intellectual property.
While your business is still small, it is hard to imagine that you could potentially face the issue of people infringing on your intellectual property assets (or vice versa)…
But, it can happen easier than you think.
It is worth the investment of both time and money to get your trademarks, copyrights, patents and trade secrets legally registered. It will be a lifesaver if, or when, an issue arises.
5. Trademarks.
You just thought choosing a business name was difficult…
But, did you consider that even as creative as you might have been, someone else might still have thought of it first?
Invest in performing a killer search to ensure your business name is not already another company’s trademark.
6. Compliance.
There are corporate compliance laws in place that affect companies in various industries. The laws that apply specifically to your business will vary based on the type of business entity you are, the state you do business in, and several other determining factors.
Do some research, and consult the help of an attorney, to ensure you know what documents should be generated and maintained by your business to remain compliant.
7. Business structure.
There are several different business structures…
Partnerships, S corporations, corporations, sole proprietorship and a limited liability company.
All business structures hold very different meanings and offer a variety of different benefits. You should consider if your business is going to remain privately funded, if you plan on taking on investors, and what type of growth you expect your company to have in the future.
You’ve already put in all the leg work to get your business up and running, don’t let a simple – and costly – legal mistake cause you to lose it all.