Top 10 Legal Tips for Start-Ups
If you are starting a new business, there are certain key legal steps that you should follow to ensure that you are setting up your venture for success. Many entrepreneurs fail to pay attention to the legal details early on but then end up paying for those mistakes down the line. Don’t be one of those entrepreneurs. Be an entrepreneur who addresses the legal details early and then rests easy knowing that their assets are properly protected.
Here are my top 10 legal tips that every entrepreneur should follow when starting a business:
- Determine what kind of business entity you want to form. Your choices are: Limited Liability Company (LLC), sole proprietorship, corporation, or partnership. Each type of structure has its pros and cons. There are many things to consider, such as the short- and long-term goals of your business, tax implications, and whether your personal assets are at risk. A business formation attorney will explain the differences between the entity types and will advise you on finding the business structure that provides you with the ideal combination of legal protections and benefits.
- Pick a business name that qualifies for federal trademark protection. Conduct a trademark clearance search to ensure that no other person or entity has priority rights to that name, either locally or federally. A trademark attorney will know best.
- Register your business with the state and secure the necessary licenses and permits.
- Get a federal tax ID, known as an EIN.
- Complete a federal trademark application for your business name and any other marks that act as source identifiers for your company. Registering your trademarks with the United States Patent and Trademark Office (USPTO) is one of the best ways to protect your brand from being infringed upon by others. It is also important to conduct a trademark search and register your marks to ensure that you are not infringing upon any other trademark owner’s rights. The last thing you want is to build up brand recognition only to be sued for infringing upon another company’s mark.
- Claim your domain name and social media profiles using your chosen business name.
- Buy the relevant insurance.
- Get your contracts in order. The types of contracts you will need depends upon many factors, such as your industry, type of business, and the size of your company. Some common business contracts that start-ups may need include shareholder agreements, partnership agreements, employee contracts, non-disclosure agreements (NDAs), non-compete agreements, independent contractor agreements, and licensing agreements. Having comprehensive contracts that protect your interests is critical to your company’s success and ability to be profitable in both the short- and long-term. Consult with a business transactions attorney to get your contracts right the first time around.
- Properly register and protect all other forms of intellectual property, including copyrights, patents, design patents, and trade secrets.