If starting your business has always been a dream, you will surely be excited when the big moment arrives. But it is often an extremely stressful time for new entrepreneurs because there is much they have to deal with.
From exploring the markets to understanding your customers, getting the right employees on board, creating processes, and more, there is much you will need to do at this stage. Even as you slog to get your venture off the ground and make it a success, there will be several other challenges to deal with.
One fact that entrepreneurs tend to overlook is legal protection for the new business, but it is more important than anything else. The last thing you would want to face at the startup phase is legal hassles. Therefore, having legal protection is a no brainer for startups. In fact, it is best to collaborate with an expert for preventing and handling issues if they arise at any point in time. Let us explain in detail why it matters so much for new businesses.
Helps establish a business structure
When you start a business, deciding the kind of entity you want to run is the first consideration. You will need to understand the implications of operating as a sole proprietorship, joint venture, corporation, LLC, LP, or LLP because each model runs differently. Getting legal counsel from seasoned lawyers can help you see the ins and outs of each kind of business structure and decide whether it aligns with your goals and needs. Moreover, you can get a fair idea about the future legal implications such as internal disputes and external lawsuits. You are likely to encounter such issues sooner or later, so awareness goes a long way.
Sets clear terms with co-founders, vendors and partners
Startups may have single or multiple co-founders, while there are also vendor, supplier, and partner relationships to handle. It is best to set clear terms with written agreements to avoid future conflicts with them. Getting legal counsel right at the startup stage can help you to clarify all the key facts, from the ownership, responsibilities, and salaries of founders to the basics of relationships with vendors and supplies. The contracts should also have clear guidelines about the termination of relationships and the handling of disputes. This way, you have a long-term and strategic plan that protects you from issues that can come up in the future.
Understand the lawsuits that may arise
Another aspect of startup legal protection is to understand the kind of lawsuits you may encounter. There could be ones filed by clients or other businesses for breach of contracts or copyright infringements. Further, personal injury lawsuits are a matter of concern as they can bring a massive burden in the form of compensation and reputational loss. For example, you may face claims for accidents caused by business vehicles. You can expect accident victims to hire the finest car accident attorneys around, so prevention of such mishaps makes sense. Slips and falls, premises injury and defective product claims are some other kinds of lawsuits your startup needs to steer clear of. Proper legal counsel can take you a long way.
Manage employee relationships
Proper legal protection as a startup enables you to manage employee relationships and prevent disputes in the long run. Your lawyer can help you create the right kind of legal agreements with the employees to ensure that they do not flout corporate regulations. Also, you will need legal counsel for handling employee lawsuits for situations such as workplace injuries, unlawful termination, office discrimination, and more. As a new business, you should make the best efforts to avoid such hassles because they can cost you time, money, and your reputation as an employer.
Safeguard your intellectual property
If your startup sells a unique product, service, or technology, you need to safeguard it legally with intellectual property protection. Not doing so gives a free hand to others to infringe on your unique intellectual property, which can spell doom for your business. Intellectual property protection for your business will include elements such as patents, copyrights, trademarks, trade secrets, assignment agreements for employees, and confidentiality agreements with third parties. Legal protection for them is not a choice if you want to maintain a competitive advantage in the market.
Considering the myriad legal considerations at hand for startups, a proper protection strategy can make all the difference. It helps you with preventing issues in the first place and also keeps you stress-free about handling lawsuits if they do arise.