Are you starting a new business? No matter how new your startup may be, avoid significant pitfalls by hiring a lawyer straight off the bat. There are many reasons why new businesses fail, but many of them could be avoided if only the entrepreneur has proper legal advice.
In this article, we will go over why entrepreneurs should get in contact with a startup focused lawyer as early in the game as possible.
They’ll Help You Set Founders Terms
So, you’re all set to start your business. You have the idea and some money to invest in your enterprise. Most people understand the challenges of running a business and don’t want to do it completely alone.
The chances are that you’ve got a partner or maybe some investors who aren’t necessarily involved in day-to-day activities. While everything may be feeling perfect and celebratory now, you never know what the future will hold.
Just like we don’t like the thought of going into marriage with the foresight of divorce with a prenup, we shiver at the idea that one day, a business partnership may fail. As with everything in life, it’s best to be prepared for the worst.
Some of the issues that the lawyer will focus on include division of responsibilities, equity splits, profit sharing, and decision making. A Partnership Agreement will help you resolve any future conflicts and avoid the expense of litigation. According to Diamond & Diamond Lawyers, a decent legal team will address concerns before they develop into conflict.
A lawyer will help you prepare agreements related to a shareholder, collaboration, and other terms. These will help orient you and make informed decisions to govern the business. Founders who don’t set these conditions may find themselves losing much more in the event of a breakup.
Incorporating, Licensing, and Permits
A lawyer can help you with the incorporation process, which creates a legal separation between you and the business itself. This will get rid of any personal liability for debts accrued by the company.
Your business will then be its own entity that will pay taxes, hold Intellectual Property, and enter into contracts on its own. The organization could be a Limited Liability Corporation, Partnership, Sole Proprietorship, or Corporation. Your lawyer will advise you based on your business, finances, and future goals.
Many sectors also require that you have specific state or multi-state licenses and permits. The lawyers may vary, and you might end up losing your business if you don’t correctly understand all of the terms.
Fix Problems Without Retroactive Solutions
Some legal mistakes may be made for which you may not have established a plan-of-action. In this case, the business will suffer some form of penalty.
Let’s layout a typical gig-economy example. Say you have violated employment laws by treating someone as an independent contractor when, in reality, they are working as an employee. A lawyer will help you save time, money, and energy.
Even after making the error, you will be subject to fines and penalties by the state and federal government. Still, a lawyer may be able to settle to lower your liability.
Trademarks and Intellectual Property
We’re sure you already know that many people aren’t very creative and love to copy the work of others. If you want to make a change and be disruptive, you’ll want to protect your trade secrets. The silent killer for many startups is a DIY approach to intellectual property.
Startups need qualified counsel to identify their unique needs and offer solutions from the start. This will help you equip your company and protect your hard work from being infringed.
Lawyers Will Significantly Ease Your Workload
Entrepreneurs have to wear many hats. You’re already juggling countless tasks and many of which you’re learning on the spot. Legal problems are quite nuanced, and it takes years to be able to interpret “legalese” as people call it.
The best lawyers understand all of the complicated facets and can help you navigate them off the top of their heads.
Young startups fail because of small mistakes that may seem trivial when you are dealing with loads of other work in the process of launching. The errors are understandable, and only a qualified lawyer can help you navigate all of the nuances.
They may not always have the best reputation, but having a lawyer will pay off in the long-run. The best idea is to be proactive and hire a decent lawyer as early in the process as possible.