The start-up world doesn’t tend to focus much on the legal aspects of establishing a biz. Everyone talks about quality of life, how to build a platform, targeting your SEO and crafting a killer product launch. But the truth is that the right framework can help you establish a foundation that will propel your start-up to the next level. It’s much less sexy than some of these other areas, but just as important. Here are 5 high-leverage areas where investing a little time will save you many headaches and move you toward your goals.
Incorporate the Right Way. It’s easy to get swept up in the excitement of starting your own company, launching a new product, and developing a marketing plan. But putting the right protections in place to separate your personal assets from your professional dealings is critically
important. The specific form may take one of four structures: n individual/sole proprietorship, a partnership, a limited liability company (LLC), a corporation or a cooperative. Which one you choose depends on a variety of factors. Get the basic lay of the land by reading Which Legal Form Is Best for Your Business? from Inc.com. For a more detailed review of the options, check out Choosing a Form for Your Business or Business Entities: Which One is Right for You? from The Bottom Line.
Deal Properly with the IRS. Few things are more nerve-wracking than finding out you’ve done something the IRS doesn’t like. It can cost you time, money and a lot of frustration, all of which get in the way of building your business. You need to obtain your employer identification number (EIN), know what to file and when to file it, what kind of recordkeeping the IRS wants to see if problems arise, and a host of other issues. Get started by going straight to the source with Starting a Business at the IRS website.
Document all Co-Founder Agreements. In the excitement of a startup, the last thing you want to worry about is what happens with your co-founders if things don’t go as planned. For a sobering reminder of why you need to deal with this up front, just watch the film about Facebook’s founding, The Social Network. Once you realize just how nasty that can get, you’ll want to do this one right. Find out what the issues are from Keep Your Startup Co-Founder Closer and Important Questions Startup Co-Founders Should Ask Each Other. For an in-depth treatment of the issues, see HighContrast’s Startup Founder Agreements.
Protect your Intellectual Property. Patents, trademarks, copyrights – you want to be sure your fantastic ideas are protected, but it seems like a lot to take on. Two must-read posts on IP for startups from the Gust Blog include Nuts & Bolts of Intellectual Property for New Startups and Intellectual Property for Startups in the Real World. It’s not as hard as you think.
Retain a Team that can Advise you as Needed. You should seriously think about making sure you have a legal advisory team that covers all of the different areas above. One all-around business lawyer probably won’t do justice to the nuances of each area. You might try to find a firm that offers expertise in each of the areas, or put together a small team of 2-3 attorneys who cover all the bases.
If you follow the above tips early on in the startup process, you’ll be able to rest assured that you’ve covered all the potential areas where legal problems can arise further down the road. And that will allow you to focus on what’s really important – launching and building your new business.
[author ]Brett Gold covers top Chicago business lawyers. He has worked in the legal industry for over 10 years. In his free time he enjoys catching up on the Game of Thrones book series.[/author]