The constant whirlwind of excitement and activity surrounding the launch of your startup can leave you feeling overwhelmed. You can get so focused on the day-to-day tasks and responsibilities involved with getting your operation up and running that you neglect some of your company’s most vital legal components.
Because you are so busy and likely not generating much revenue during the startup phase, it may be tempting to try to handle everything on your own, and not seek out the support and advice of an experienced business lawyer. This is especially true today when you can access just about every conceivable legal document online for cheap from the countless online document services like LegalZoom and Rocket Lawyer.
However, taking the do-it-yourself (DIY) route can put your fledgling business—and your personal assets—at serious risk. Without the proper legal protections in place, your startup is just one accident, audit, or lawsuit away from ruin. Fortunately, with the advice of a trusted business lawyer, you can easily avoid the most common legal pitfalls and position your new company for rapid, sustainable growth. While every business is different, and you should consult with your Family Business Lawyer™ early and often during the startup phase, here are four critical areas where our support can prove invaluable.
1. Entity Formation & Maintenance Choosing the right business entity structure for your business is one of your first and most crucial decisions when launching a startup. In fact, the entity you choose for your business will affect everything from the amount of taxes you pay and what kind of records you are required to keep to how vulnerable your personal assets are to lawsuits incurred by your company.
Whether you choose a sole proprietorship, partnership, limited liability company (LLC), or corporation, each entity comes with unique advantages and disadvantages, all of which must be carefully considered before you launch. As your Family Business Lawyer™, we will not only help you choose the correct entity for your business, but we can also support you in setting up and maintaining your entity over the life of your business.
In fact, we offer specially designed maintenance packages to help ensure certain business entities, such as LLCs and corporations, maintain the proper business records and adhere to the required administrative and corporate formalities. With our support and guidance, you can rest assured that your entity will remain in constant compliance and provide the maximum level of liability protection for your personal assets.
2. Creating Legal Agreements Ultimately, your entire business is one vast series of agreements: agreements with investors and lenders, clients and vendors, employees and contractors, partners and customers. The success of your business depends on your ability to make agreements and seal the deal in a win/win manner in each and every one of these relationships. Furthermore, your legal agreements are designed to govern and protect some of your company’s most essential elements: your personal liability, intellectual property, financial investments, and tax strategies, to name just a few. Are you really going to trust generic, fill-in-the blank forms you find online to govern such crucial components of your business?
Whether you need new agreements created or want us to review agreements you already have—even those drafted by another lawyer—meet with your Family Business Lawyer™. We will support you to not only create clear concise agreements, but also implement an agreement process that will allow you to more effectively navigate the inevitable changes that take place in every relationship, while dealing with conflict in a way that’s both healthy and productive.
3. Intellectual Property Protection
Whether you realize it or not, your intellectual property (IP) is one of your company’s most valuable assets. In fact, studies show that up to 80% of the value of a typical business is IP. Problem is, most companies aren’t properly protecting these vital intangible assets.
You should start by trademarking your company’s name and registering for copyright protection for the copy on your website and in your advertisements. And to ensure your business owns all of the work you pay others to create, you will also need to make certain that all agreements you have with independent contractors and vendors include work-for-hire provisions, and that all agreements with clients and customers have limitations-on-use provisions.
Your Family Business Lawyer™ will not only help you secure the necessary IP protections and create airtight legal agreements, but we will also take the necessary steps to protect your IP to ensure your intellectual property rights aren’t infringed upon. Additionally, we will help you leverage and maximize the value of your IP assets, and support you with developing an ongoing strategy to build a winning brand.
4. Securing The Proper Business Insurance While setting up your business entity can safeguard your personal assets from your company’s liabilities, that entity will not protect your business assets—that’s where business insurance comes in. And seeing that a single catastrophic event or lawsuit can wipe out your company, it’s crucial that you have the proper insurance coverage in place from the moment you open your doors.
The type and amount of coverage your company needs will largely depend on your particular company and its assets. That said, most businesses can benefit from several common forms of insurance, including general liability insurance, professional liability insurance, property insurance, and employment practices insurance. Additionally, you should also consider investing in umbrella insurance, which would cover you for any damages in excess of your other individual policies.
Before you sit down with an insurance agent, meet with your Family Business Lawyer™. We’ll evaluate your business assets and underlying risks to identify the optimal levels of coverage you should have in place to protect your business from all potential risks.
Build A Solid Legal Foundation
Launching a new business is difficult enough without having to worry about costly and potentially ruinous legal problems hanging over your head. Start your business off right by sitting down with your Family Business Lawyer™ to ensure your startup has the proper legal foundation in place.
As your Family Business Lawyer®, we are specifically trained to help you keep more money in your business, watch out for risks and pitfalls, handle sticky situations, and effectively tend to the parts of your business that are especially challenging, particularly those involving the legal, insurance, financial, and tax (LIFT) components of your operation. By working with us to build a solid LIFT foundation for your startup, you can finally gain genuine confidence about your company’s long-term success. And armed with that clarity, you can devote all of your energy and passion into growing your business into something truly meaningful for yourself, your clients, and your family. Contact us today to get started.
This article is a service of Daniel O’Connor, Family Business Lawyer™. We offer a complete spectrum of legal services for businesses and can help you make the wisest choices on how to deal with your business throughout life and in the event of your death. We also offer a LIFT Start-Up Session™ or a LIFT Audit for an ongoing business, which includes a review of all the legal, financial, and tax systems you need for your business. Call us today to schedule.