There are several legal issues you need to be aware of and prepare for prior to starting a company. Failing to account for these issues could cost your company a lot of money in addition to bring bad publicity to your brand. What are some specific business legal issues you should know about?
Infringing on Patents and Trademarks
If another company has a patent for a product or idea or has a trademark for a logo or other slogan, you cannot infringe on those rights. This means that you can’t make a patented product without permission or create a logo or slogan that sounds similar to one that is already trademarked. However, it may be possible to defend against a lawsuit by claiming that the patent or trademark holder wasn’t actively using it or defending their right to it.
Draw up a Shareholder or Founder Agreement
It is important that you and your founders or original investors understand what their roles and responsibilities are. Creating such an agreement may also specify how much equity each person has, what it’s worth, and how and when it may be sold. This may reduce the odds of a dispute that would need to be settled in court.
Submit Other Required Documents
If you plan to run your company as a corporate entity or as an LLC, you will need to file articles of incorporation with the state. You may also need to register for an employer number as well as submit quarterly forms to the IRS outlining how many workers you have and how much you have withheld in employment and income taxes.
Hire Legal Counsel or Get Your Law Degree
Despite your best intentions, it is possible that your business could be sued or face other legal action from a third-party. To reduce the chances of a dispute either being resolved in favor of the other party or the chances of it going to court, it may be a good idea to have legal counsel on hand. Alternatively, you may want to have one founding member who has obtained or is obtaining a master’s degree in law online.
There are many legal issues that a new business should account for as soon as possible. Hiring a lawyer and putting all agreements into writing may reduce the chances that your company is sued or loses a decision in court. Legal counsel may also help make sure you have incorporated properly and are following all employment and tax laws.
Brooke Chaplan is a freelance writer and blogger. She lives and works out of her home in Los Lunas, New Mexico. She loves the outdoors and spends most her time hiking, biking and gardening. For more information contact Brooke via Twitter @BrookeChaplan.