Starting a new business is very exciting, but it’s important to understand the legal challenges that can arise. Many start-ups face legal trouble because they overlook a few key areas in the early stages.
Being proactive with the legal aspects of your new business can protect your new venture from legal challenges. Below are some essential points to remember.
Choosing the right business structure
One of the first legal decisions you’ll make is how to structure your business. Should you operate as a sole proprietor, form a partnership or set up a corporation or LLC? Each option affects your taxes, personal liability and how you can raise money. Choosing the wrong structure could limit your growth or leave you personally responsible for business debts.
Protecting your intellectual property
Your brand name, logo and any unique products or services are valuable assets. Without legal protection, others can copy or use them. Registering trademarks, copyrights or patents can prevent this and give you legal options if someone tries to steal your branding.
Handling contracts and agreements
Start-ups often enter into agreements with co-founders, employees, vendors and investors. If these deals aren’t written clearly and legally sound, they can lead to disputes. It’s important to have well-drafted contracts that define roles, responsibilities and what happens if something goes wrong. Informal agreements are very difficult to legally enforce.
Compliance issues
Many new businesses overlook local, state or federal regulations. Whether it’s licensing rules, tax laws or industry-specific regulations, failing to comply can result in fines or even shut down your business before it gets off the ground.
Making sure your new business is legally compliant is non-negotiable. Seeking guidance can help ensure that you get started the right way.