Startup Law

Legal Things Startups Should Take Care of From the Start

Starting a business is a challenging task even without details that are hiding in plain sight and are usually overlooked by business owners. Most entrepreneurs focus on developing their product or service, marketing their business and managing their tight budget so much that they forget about legal matters necessary for running a business. Forgetting or neglecting your legal obligations may result in business failure before you even realize that something's wrong.

In order to run a successful business, every entrepreneur must be aware of their legal responsibilities and they need to settle any legal issue there is, in order to grow their business further. That's why every entrepreneur should seek professional legal aid that will inform them about those responsibilities, as well as help them understand how to deal with those issues the best way possible. Here are a few legal matters startups should take care of from the start.  

Choose the best structure for your business

Most startups begin their business journey as a sole proprietorship, which requires no extra fees or additional documentation other than a standard business license. However, sole proprietorship business operation has its disadvantages. For instance, there can be only one owner. Also, you can't gain additional capital from an investor - instead you must change your business structure to form a partnership.

There is no protection for the owner of the sole proprietorship, meaning that business creditors can sue you. That's why it's important to choose the right business structure from the start and ensure that your business, as well as your assets are legally protected. Choosing to register your business as a corporation or an LLC (Limited Liability Company) may be a better option for your startup.

Have your legal documentation in order

In order to protect yourself and those working with or for you, you must prioritize your legal documentation. These documents involve agreements such as a partnership agreement, confidentiality agreements, payment agreements, employee agreements, non-disclosure and so on. Another important documentation you need to be aware of are contracts. Contracts help protect your assets, as well as your company, and they are essential for any kind of business.

For example, you write contracts with your employees, investors, contractors and even customers that will be legally binding. That way, you can take legal measures against any party that doesn't uphold their end of the bargain and vice versa.

Look after your intellectual property

If you're planning on storming the market with a brand new product that will put others to shame, then you need to protect your intellectual property (IP). Without protecting your IP, you expose yourself to a risk of having your ideas stolen. If you have a product that will revolutionize the industry or some new cutting-edge technology in mind, keep quiet and patent it. However, protecting your IP can cost a lot of money, as patents range from $5,000 to $100,000 depending on their function and purpose.

Also, you'll have to pay for legal aid that will help you apply for a patent. That may be a hefty sum to pay for someone who's just starting a business, but it's necessary if you want your ideas to remain yours. In that case, you may want to consider taking a loan. For example, if you're operating from the Land Down Under, you may opt for Australia business loans and cover the expenses of patenting your product.

Get legal counsel

Taking care of legal thing doesn't just mean sorting out your paperwork, but identifying your legal obligations as well. Consulting with an attorney can help you better understand these obligations. For instance, an attorney can inform you about licenses and permits that are required for your business to operate legally, as well as what types of insurances or bonds your business must obtain.

Furthermore, they can inform you about laws and regulations you must abide by for your business to operate within the law, such as employment law, corporation law, security law and so on. Last but not least, they can help you understand your tax obligations and tax law requirements, meaning that they'll point out which taxes you must pay and which taxes to pay attention to.

There are a lot of legal things you must take into consideration when starting your business. It's important to protect yourself and your company from anything that may do you harm. Also, it's important to follow certain rules that are imposed by the government, so that your business may operate without any trouble.