Building a startup company takes vision and great ideas. But
before you can get up and running, it also requires legal
understanding and planning. Startups
need to go through steps to protect the owners and the
organization. Before you start doing business, make sure you have
worked through these preliminary steps.
Create a Legal Entity
When you set up a business, you should create a separate legal
entity under which you will operate, typically a corporation or an
LLC. Identify the place you want to incorporate and set up to
legally operate in all of the places you want to do business. You
also need to set up your finances to ensure the assets of your
company remain separate from your personal assets and file all the
relevant paperwork to set up. This keeps someone from being able to
attack your personal assets over a dispute with your business.
Agreements and Contracts
Besides protecting yourself from outside risks, you need to make
sure inside disputes cannot derail you. Any agreements you have
with co-owners or investors need to be in writing and should
contain terms which you are comfortable with. You should include a
vesting schedule within your agreements in order to prevent someone
from getting cold feet and leaving early with his or her ownership
interest. You also want to set rules for bringing in new or
In addition to setting up, startups need to anticipate and plan
for ending operations. What criteria need to be in place for the
business to sell? How will owners divest their interests if you
choose to part ways or close down? Startups eventually end
operations, and you need to plan before the moment arrives.
Protect Your Intellectual Property
When you plan your company, you do so with ideas in place.
Before you begin operating, you need to develop patent, trademark,
and/or copyright protection for the products or methods that will
come from your ideas. This ensures no one else can steal and run
with them before you are able to build up your business.
Ensure Legal Compliance
Finally, you need to understand the laws and regulations that
govern your operations. If you are non-compliant, whether in
corporate, tax, or securities law, you can lose the business and
more. Barnea & Co. has extensive
expertise in helping startups begin with the right legal footing.
Contact us today to help turn your ideas into a solid business.
Originally published on April 5, 2016
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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