You have a great idea, you just purchased the prefect domain and you’re working on securing funding. This seems like every entrepreneur’s dream, right? Well, not so fast. The legal downside may seem like a remote risk, but taking the time to undertake some due diligence first is something many entrepreneurs realize the value of when it’s simply too late.
Our firm focuses on assisting businesses through all manner of legal assistance. In our practice, these are some of the common missteps we’ve seen from startups and established businesses:
(1) Not creating a corporate entity
Don’t make the mistake of thinking that if you’re “small” you don’t need to register as a corporate entity. Based on the needs and nature of your business, there are myriad options for you to create a corporate entity under which to do business. You can incorporate as a corporation, a limited-liability company (LLC), a limited-liability partnership (LLP), or, in some instances, a non-profit corporation. All of the various entities have different benefits and requirements. It can be confusing to understand which type of corporate entity is best for your business. To learn more about what type of corporate entity may be best for your business venture, contact us today!
(2) Not having a business bank account
Not only does it keep records easier to manage than having to go through personal statements, there are also - in some instances - legal rights that are created when two business decide to render services for payment to one another. If the payment comes from a personal account, those rights may not be created simply on payment. In my time practicing law, this is one area I have seen companies on both sides of the business landscape overlook. Companies that had employees and multiple assets as well as companies with no employees were conducting some or all of the business out of the principal’s bank account!
(3) Starting a business with others without a partnership agreement
This is simply a matter of managing risk. A partnership agreement exists to eliminate all uncertainty if the partnership does not work. Outlining all the expectations of the business partners if the business needs to be dissolved or if the partner(s) wish to pursue other ventures is preferable to years of litigation that could result if someone wishes to leave the partnership or is asked to leave the partnership, and the process is not reduced to writing. Taking the time to outline those expectations when the professional relationship is formed is something that many new businesses neglect to do because of the perception that it takes time that could be better spent elsewhere. Partnership agreements can be complicated and nuanced and should have an attorney’s guidance in its creation and review. If you need to create a partnership agreement, or have one that needs to be reviewed, please contact us today!
(4) Creating, but not registering, intellectual property
Most of the things your company does, from its name and logo to its basic business practices, may be unique intellectual property that the company can and should protect. However, so many new businesses don’t want to undertake the expense associated with registering that intellectual property. This is a very big mistake for a number of reasons, chief among them that you potentially let your competitors profit off of your hard work after you have taken the time and spent the resources to gain notoriety and achieve success. Take the time to protect what is often your greatest asset: your intellectual property.
The Law Offices of Trent J Swift offers help to clients who need legal assistance at all stages, whether at the very start of their business or along the way when legal issues arise. The firm offers services tailored to the needs of its clients and realizes and appreciates the value of a lasting relationship. To begin the process of making sense of your legal needs, please contact us today!