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How to Avoid Making a Legal Mistake in Your Startup Company
by Eileen OShanassy Tue, 01/24/2017 - 09:57
Preventing legal mistakes when getting a startup company off the ground can be critical to the survival of the business. It doesn't matter whether you're writing books for children or manufacturing computer components, there will always be legal implications. Be aware of the following mistakes that others have made and make sure you have a solid plan for avoiding them.
The Type of Entity
Even if you're going it alone and your business begins in your life and ends with your death, a sole proprietorship might be the riskiest form of a business entity. If the business fails, your personal assets can be seized by creditors. A subchapter S corporation can protect those assets, and that corporation is relatively easy to set up. An experienced lawyer is in the best position to advise you on the type of entity you should operate through.
You don't want to infringe on the intellectual property of somebody else. Their intellectual property might be a symbol, name, image, artistic work, phrase, or even a sound. You'll want to be sure your business branding doesn't infringe on others. Don't create a likelihood of confusion. A thorough search on any possible intellectual property issues might avoid expensive and troublesome changes in the future.
After you've created your company's own intellectual property, you'll want to protect that too. According to a Collin County Lawyer, protection might come in the form of patents, trademarks, copyrights, or even trade secrets. A common protective measure is for the principals and employees to assign their intellectual rights to anything that they've created over to the company. Without that protection, they can leave the company, and they can take that intellectual property with them.
Authority and Responsibility
If more than one person is involved in the startup, each person must have a clearly defined role. If roles and responsibilities aren't defined at the outset, problems and friction are likely to arise in the future. Putting a written partnership or shareholder agreement in place before you start doing business might be critical to the life of your business in the future.
All the above mistakes can be attributable to failing to work with an experienced lawyer. Of course, cash is going to be thin when you're just starting out, but merely filling in some blanks on some forms that you bought off of the internet isn't nearly enough. The experts you employ will help you build a solid foundation for your company.
About the author
Eileen O'Shanassy is a freelance writer and blogger based out of Flagstaff, AZ. She writes on a variety of topics and loves to research and write. She enjoys baking, biking, and kayaking. Check out her Twitter @eileenoshanassy.