An entrepreneur’s journey is often exciting, but it is fraught with risks and challenges as well. As you seize opportunities to turn your vision into reality with a dream startup, there are some legal implications that you may have to deal with along the way. Unless you are covered for all such implications, you may end up facing serious consequences at the early stage of the setup. While you may have a basic understanding of business law, things can get tricky if you are starting a company.
Seeking legal guidance is your best bet at this stage, but entrepreneurs often want to save money on hiring attorneys because of their cash constraints. However, it isn’t something you should cringe at because legal pitfalls can land a new business in deep trouble. It can cause extensive damage, both in terms of money and reputation. So it makes sense to be legally sound right from the start, which is possible only with the help of an expert. Also, awareness about the legal implications for new businesses keeps you on the safe side. Here are the most common legal concerns that every new entrepreneur should know about.
Even before you start with your new venture, you need to make sure that the business is compliant with the prevailing law and regulations. Corporate compliance matters for businesses of all sizes and in all types of domains. Apart from ensuring that the entity is lawful, you must also know all about the type of records and other documents you will have to generate and maintain through the company’s lifespan. Compliance isn’t a one-size-fits-all thing because the laws and regulations vary based on factors such as the domain, type of business entity, and location of the setup. Unless your business is compliant, you cannot expect to operate seamlessly.
Business structure and licensing
When it comes to setting up a venture, you have multiple options in business structures that you can consider when at the startup stage. You can choose between a sole proprietorship, partnership, S-corporation, and C-corporation.
The choice of the right structure can be vital to the success of the company and also decides several factors, such as your personal liability and tax implications. Apart from the structure of the entity, you also need to pay attention to the specific licenses or permits you may require to start operating. At a minimum, you will have to get a license from a local or state agency and a tax registration at the time of setup.
Contracts and agreements
Although you may want to keep things simple with contracts and agreements, you should absolutely have written ones that clearly outline the rights and obligations of the parties involved. Verbal contracts aren’t a good tactic because disputes may arise at any point, and not having things written can make them hard to resolve.
At the startup stage, a business may have to enter various types of arrangements, such as partnership agreements, employment agreements, and client contracts. It makes sense to have them drafted carefully with attention to every clause that you and the other parties may want to include. Having a legal professional to draft the language for contracts is the best approach.
Personal injury lawsuits
For an entrepreneur who has just ventured into the business landscape, personal injury lawsuits can take you by surprise. They can be of diverse types. For example, you may come across a premises liability lawsuit if a customer has a slip and fall injury at your premises.
Consumers may sue you if they are injured due to a defective or dangerous product. If your employees drive business vehicles and have an accident while on duty, the victims can hire high-caliber car accident lawyers to claim hefty compensation from your business. You need to focus on preventing such mishaps in the first place. Additionally, you should have a legal strategy to deal with such lawsuits.
Intellectual property protection
If you are just starting, you may not realize the significance of safeguarding your intellectual property, but it deserves as much attention as any other legal issue. Filing to cover this aspect means that you may end up losing your unique offering and market advantage in the long run.
Startups bringing innovative products and new concepts are always at high risk, and they need to go the extra mile with the protection of their intellectual property. It is possible to get legal cover for these confidential elements of your business with the help of patents, trademarks, and copyrights. If a competitor tries to infringe your IP, you can file a lawsuit against them and protect the assets that serve a competitive advantage to your business.
Another legal implication that entrepreneurs cannot overlook relates to employment laws. There are several federal, state, and local employment laws that every business has to comply with. For example, it is illegal to discriminate against employees based on their ethnicity, race, color, gender, and religion.
Further, there are special laws for the protection of persons with disabilities. Small business owners also have to ensure compliance with wage and hour laws. Not adhering to these laws and guidelines can bring massive legal hassles for your startup and also damage your reputation as an employer. These laws, therefore, become all the more crucial for new ventures.
Startup owners have several legal concerns to deal with, and not paying attention is the worst you can do for your new business. Although awareness can go a long way in making your business lawful, having an expert business lawyer in your team can ensure legal protection for your company.
Not only do they guide you about every aspect of staying safe, but also come to your rescue when a lawsuit or issue arises. Even though startups often struggle with budget constraints, it makes sense to factor legal costs into your business plan. You can economize elsewhere, but missing out on legal aid can be expensive if you lose a lawsuit in the long run.