As an entrepreneur, you want your company to succeed. However, having a solid idea or high-quality products for your startup company isn’t enough to achieve success. You must also be aware of the legal challenges of setting up a startup company. These may include intellectual property rights, trademark laws, employment laws, and financial regulations.
If you don’t know how to navigate these legal challenges, you’ll likely face issues with authorities. For instance, if your startup has a product that infringes on someone else’s trademark or copyright rights, it can cost you millions of dollars in damages and legal fees. If this happens, it may be difficult for you to regain control over your company and deal with the aftermath of such a situation.
To avoid these issues, you must find a good venture capital lawyer specializing in startups. Apart from hiring a reputable attorney, this article discusses how you can navigate legal challenges as you run your company.
1. Register Your Name With Authorities
Prior to running your business, make sure that you are registered with the authorities. Doing so protects you from lawsuits while establishing a safe working environment for your customers and employees.
Seek assistance from the local government with authority over the area where you intend to operate. Depending on your location, this may include registering a trademark or service mark or obtaining a license to run a business within a specific region.
Before you even go to the authorities to register your brand name, check if it’s still unused. You may verify through the website of United States Patent and Trademark Office or the governing body in your country, which lists all registered trademarks at any time.
2. Find A Reputable Attorney
As a startup owner, you should familiarize yourself with the legal system and the terminology used specifically in your industry. To lessen this burden, you can hire a venture capital lawyer specializing in startups. It’s better if they are familiar with your line of business.
When hiring an attorney, look at their experience to determine if they are qualified for what you need them to do. Don’t just read the testimonials on their website; check reviews online. If you know other entrepreneurs, ask for references. By doing some research, you can avoid working with an attorney who doesn’t have your company’s best interest in mind.
3. Decide On Your Business Structure
Another way to protect you against legal issues is determining the business structure that fits your goals. This makes it easier for you to get legal advice and ensure that your business is protected from lawsuits related to your company’s operations.
Here are the three most common types of business structures:
- Sole Proprietorship: One individual owns and operates an independent legal entity. The sole proprietor is responsible for all aspects of the business, including financial management and hiring employees.
- Limited Liability Company (LLC): An LLC is available to entrepreneurs who want to protect themselves from personal liability while still being able to participate in the success of their companies. When you create an LLC, you create a separate legal entity that functions much like a corporation but has fewer legal requirements.
- Corporation: It’s an organization with shareholders who share in profits and losses and other rights and responsibilities associated with running a business. You can hire employees, sell shares in your company, and manage finances without having direct responsibility for them.
4. Create Contracts With Vendors
A contract is the foundation of any business relationship. Without a warranty, you have no legal recourse in case of a dispute. So, you must establish and sign contracts with your vendors to minimize risks and protect your business from liability.
A good contract must include all essential terms and conditions of sale, including when payment is expected and what happens if you breach the terms of the agreement. Ideally, you should involve your lawyers in contract signing. Nevertheless, it’s not always necessary to go through this process as long as all parties know what they agreed upon before signing a contract.
You should also create contracts with vendors to ensure they understand how and when to deliver your needs. This way, you can avoid any downtime caused by a lack of communication or delays in deliveries due to disputes over business-related issues.
When you run a startup business, it’s easy to forget about the legalities of your operations and focus on the wealth aspect. However, your company may face legal issues, such as being sued by customers or having your assets frozen. This can affect your company’s reputation and even cause you millions. So, before hitting the ground running, look into the legal side of things and make sure you’re covered.