Creating a new business can be exciting, but there are lots of legal matters involved. So when should you hire a startup lawyer? Find out here.
Are you thinking about creating a startup? Well, not to startle you, but 90% of startups fail eventually, so the odds are against you.
Don’t let this dishearten you though. If you believe you have fantastic offerings and can fill a niche effectively, then that’s part of the battle won.
To really succeed, you need the assistance of experienced professionals, such as accountants, lawyers, etc. Forming a team of experts is a wise business move. This gives you a wealth of knowledge to access.
Are you now wondering when you should hire a startup lawyer? Read on to find out.
Business Formation
Needless to say, creating a startup business entails lots of complicated forms, and if you don’t fill them out right, it can delay your doors opening. There’s also the matter of choosing the right legal structure, and reading up on your own can get confusing. For example, you can form a:
- Sole proprietorship
- Limited liability company (LLC)
- Partnership
- Corporation
A startup attorney can guide you through the process of choosing the right legal structure by going over the pros and cons of each. Plus, they can assist with registering your business with the appropriate government authorities. It’ll feel like a piece of cake with their help.
Drafting Foundational Documents
After registering your business, you’ll have to draft foundational documents, such as articles of incorporation, bylaws, operating agreements, and partnership agreements if you’re not a sole proprietor. All of these things establish startup ownership, as well as the structure and governance of your business.
It’s essential that these documents are airtight. If you have any partners, then these documents describe what each person’s role is and more for complete transparency.
And if there are any legal disputes, the court will refer to these foundational documents to make decisions. Your startup lawyer can represent you in court too. They can represent your interests in negotiations, mediation, and arbitration as well.
Fundraising and Investment
Chances are, you won’t have all the capital you need to create your startup. You can always take out loans, but other avenues include fundraising and investment.
If you plan on seeking funding from investors or venture capitalists, then a startup attorney can walk you through the process. They’ll prepare the necessary documents (such as term sheets and subscription agreements), ensuring that your interests are protected during negotiations.
Intellectual Property Protection
Does your startup rely on unique inventions, designs, trademarks, or other intellectual property? Then you’ll need to protect these things fiercely. If anyone copies or steals your ideas, then you’ll quickly be out of business.
If you hire a lawyer, they can help you file for patents, trademarks, and copyrights. You’ll safeguard your startup easily by doing this, as they’ll make sure you’ve crossed every T and dotted every I.
You’ll have peace of mind knowing there won’t be obstacles to offering something unique to your target audience. And if anyone tries to steal your ideas, your attorney can help shut them down fast.
Contract Drafting and Review
Most likely, you’ll create business relationships with partners, employees, suppliers, and customers. To ensure everyone’s rights are protected, everyone involved will have to sign contracts.
More specifically, you’ll need to have compliant hiring practices that properly compensate your employees. It’ll be vital to have documents such as non-disclosure agreements.
A business lawyer can help you draft and review these contracts. That way, they protect your interests and comply with applicable laws.
Regulatory Compliance
Depending on your industry and location, there may be specific regulations and licenses you have to comply with. Sorting out everything on your own can be stressful and time-consuming, so this is where a legal services provider can really shine.
These professionals can navigate these legal requirements so you avoid potential fines or startup legal issues. Examples of issues they can deal with include business licensing, tax compliance, employment laws, health and safety, environmental regulations, and data privacy and security.
Regulatory requirements can change over time, so you need to remain vigilant and make changes accordingly. A compliance officer or team is excellent for this; if they notice any regulatory changes, then you can inform your lawyer so you can work together on updating legal documents.
Exit Strategy
Perhaps you won’t always want to have ownership over your startup. If you plan on selling your business or have a succession plan in place, then hiring a lawyer is a smart decision.
They’ll simplify the legal complexities of these transactions and ensure a smooth transaction. You can count on your attorney to organize financial records and ensure compliance with regulatory requirements.
When you want out, you won’t have to deal with the headache and hassle of all the paperwork involved. Even better is, your startup lawyer can help you come up with a contingency plan in case the original exit strategy doesn’t go accordingly.
Consult With a Startup Lawyer
As you can see, a startup lawyer can do so much for your business, and this is just the tip of the iceberg.
The reality is, if you want your startup to succeed, then spending some extra money for a legal professional is worthwhile. They can assist you from the moment you conceptualize the company to when you want to sell it. As a result, you’ll save money and time in the long run, as you’ll be drawing upon their years of experience and knowledge.
If you’re interested in more business products and services, then read the rest of our blog.
