Many people start a business based on a great idea but fail to run it successfully because of ignorance about legal issues. In this article, some valuable legal tips for startups are being presented which will help them avoid trouble. The best way would be to get in touch with an expert who will provide extensive guidance on aspects of beginning a new venture. However, a lot of new entrepreneurs think that hiring a specialist startup legal services firm or a professional will be a wasteful expense. On the contrary, engaging such an advisor will be a smart investment which will help in running the operations smoothly and ensuring that the business complies with applicable regulations. Let’s take a look at some legal tips for startups which can help new business owners keep legal hassles away.
1. Choose A Suitable Legal Type For Your Business
The first and most important legal decision that any entrepreneur has to make is to choose a suitable copyright attorney for the new business. There are various formats that can be used for registering a venture. However, the ownership structure of the company, as well as the effect of incorporation on the personal assets of the owners, have to be considered while making the selection. An incorrect choice can make the owner responsible to settle any liabilities of the entity with his/ her personal assets.
2. Do Not Begin Without A Founder’s Agreement
When a venture is being started by more than one individual, then formalizing their association with a founder’s agreement is essential. This document will define the roles and responsibilities of all the partners besides detailing the ownership structure of the organization. It must also contain the exit strategy for the founders. An exit plan is required not only when a partner wants to leave the company but also in the event of the failure of the venture. The founder’s agreement must also include the share buyback plan and the scenarios in which a partner can be fired.
Don’t Miss –
20 Best WordPress Themes for Entrepreneurs, Startups & Small Business Owners
Startup Business 101: How to Get a Loan with No Credit
3. Acquire The Necessary Legal Permissions And Licenses
All enterprise need various types of licenses in order to be legally able to run their operations. These licenses depend on the nature and scope of the business. For example, a company which manufactures fireworks besides getting legal incorporation will need a permit for the factory premises as well as an explosives license. It will be sensible to make a list of all the authorizations that are required before actually starting the operations of the enterprise.
4. Understand The Tax Payment And Reporting Requirements
Taxes are the most common reason for legal issues for new companies. Business owners must know about the applicable taxes for their enterprises. They must also learn about the returns that are needed to be filed during a financial year. This will give them an idea about the documents that are needed to be maintained for the purpose. The legal structure of the entity and the nature of operations define its tax liabilities. Entrepreneurs must make a thorough assessment to plan their taxes and lower their burden. This is one of the most important legal tips for startups.
5. Protect Your Intellectual Property Assets
New business owners must be aware of the importance of their intellectual property assets and take the necessary steps to ensure their protection. Most companies are based on an innovative idea or a technological solution and they must get a patent for such assets. They must also get trademarks for their brand name, logo, and other symbols which are associated with their products or services. An experienced copyright attorney can be useful to assist with this process. They will help you to establish your rightful ownership over intellectual property assets and provide legal remedies in case of their unauthorized use.
6. Know About Your Responsibilities Towards The Employees
Every aspect of managing the workforce of an organization is governed by employment laws. Right from hiring people to dismissing them must be done according to the specified regulations. There are rules which dictate the payment of minimum wages and define ideal working conditions. Employers must engage labor law experts who will help them in understanding their responsibilities towards their staff members.
7. Always Use Legal Contracts For Transactions
Another valuable suggestion that can protect new businesses from legal trouble, as well as financial losses, is to use legal contracts for all kinds of transactions. Most companies need assistance from external vendors to acquire raw material or get help on a process. All such agreements must be formalized with watertight legal contracts which define the scope of the arrangement and the responsibilities of each party. Similarly, contracts must be used for marketing, advertising, and distributorship agreements.
8. Get Legal Help To Draft The Privacy Policy And The Terms Of Use
New enterprises must take into consideration the privacy laws of the jurisdiction where they are based.. The privacy policy communicates to customers or website visitors the nature of information collected by an organization and the manner in which it is used. The “terms of use” is an agreement which defines the conditions that a visitor must agree to before using the organization’s website. Strict privacy laws such as GDPR of European Union make the company accessing personal data of individuals liable for its protection. This makes it necessary to have a policy in place to ensure compliance with the law.
