Starting your own startup can be a daunting affair.
There are many things you need to organise before you get started making the whole process seem incredibly overwhelming. You’ve got funding issues, finding and hiring staff, finding office space, and many other issues that arise.
“The foundation of every new thing, be it a business or any other thing, determines it’s strength, stability and growth”
– Harmony Attise, CEO of Commec Ghana Ltd
One of the most important things to take care of first are the legal aspects. Starting your own Startup is a serious matter and there are some very important legal steps you must cover before you get going.
In this post, we’re going to cover ten legal tips you need to know before starting your Startup. After reading this post, you’ll know what you need to do to cover your legal bases.
1. Choose your Business Structure
This is one of the most important decisions you’ll make and it can have some major legal ramifications in the future. If you’re serious about your Startup then it’s advisable you register the business as either a Limited Company or a Corporation. Most businesses start out as a sole proprietorship but in the case of a Startup, this just isn’t a good idea.
Registering your Startup as a Limited Company or a Corporation gives you protection over your personal assets and gives you greater legal protection in case of any disputes with consumers.
2. Get Contracts Written
Contracts are an absolutely essential requirement for any dealings involving your business.
Contracts need to be written up for your employee’s, outside contractors, investors, and everything else in between. Don’t make the mistake of thinking you don’t need contracts. There are too many problems that can occur without them like customers or clients that won’t pay for your product or service.
If you have a contract written up, you can take legal action against them. Without one, there’s not much you can do.
3. Get Insurance
Your business is going to need insurance. You want to make sure you’re protected against all outcomes no matter what they may be. The most effective way to do this is with insurance. It’ll also give you a lot more peace of mind as you set about building your business.
Ask around and so some research to find the best insurance providers for you.
4. Understanding Tax Obligations
Unless you’re already an expert on tax you’ll need to probably hire a tax attorney on this one. Tax is definitely not an area you want to take any chances on so make sure you know in advance what and how much tax you’ll be obligated to pay.
5. Get the Necessary Legal Documents
You need to get your legal documents in order. We’ve already mentioned one of them, contracts. However, there are many more such as confidentiality agreements, partnership agreements, payment agreements, and plenty more. These legal documents protect you and the people involved with your business.
You shouldn’t consider starting a Startup without them.
6. Protect Your Intellectual Property
Don’t be a fool and think you don’t need intellectual property protection. Without protection, you run the risk of having your ideas and products stolen. If you don’t have intellectual property protection on your ideas and products then you won’t have a legal leg to stand on if they’re compromised.
Find out in advance whether you’ll need patents, trademarks, and/or copyrights.
7. Consider Your Legal Advice
You’ll need to consult with a lawyer to cover all your legal bases before starting your Startup. However, you need to do your due diligence here otherwise you could find yourself on the receiving end of bad legal advice. Ask around at first and speak to a few lawyers until you find one that you feel confident in dealing with.
The legal advice you get is one of the most important aspects of this entire process. Bad legal advice could potentially cripple your business, good legal advice could save it.
8. Establish a Buy-Sell Agreement
This is super important if you’ve got co-founders or owners in the business. Even if you don’t have a co-founder, there’s probably going to come a time when you engage in joint partnerships. In this case, you’ll still need a buy-sell agreement.
Essentially, what this does is clarify a legal agreement that defines what happens in case one of the partners or owners decides to exit the Startup.
9. Use Legal Disclaimers
You’ll need legal disclaimers on your products and services. This protects you and makes sure that the consumer understands that your product or service isn’t solely responsible for their outcomes. Essentially, it spells out the responsibilities of both parties once money has been exchanged.
Also, make sure you include disclaimers and TOS on your website or you could find yourself on the end of some silly lawsuits.
10. Make Sure You’re Operating Legally
Do your groundwork in advance and make sure that your business is able to operate legally. There was a case of a business in Florida in the United States that ended up being fined because they didn’t have an operating licence for their business.
The last thing you need is a hefty fine that could potentially put your Startup on the backburner as soon as you get started.
The legal aspects involved in starting a Startup are some of the most important of the entire process. These tips should give you a good base to work with so you know what you need to do before you get started.
However, it doesn’t beat speaking to a real lawyer.
Get in touch with us today and speak to one of our legal experts. We’ll make sure you’ve got all your legal bases covered before you start your Startup.