Starting your own business is an exciting journey, but as exciting as that venture is, it is also a lot of work. Many people do not realize that some of the most important decisions that need to be made when forming a business involve legal matters. If you want to put your business in the best position to succeed, read part one of this blog below.

    I.        Trying to Handle Everything By Yourself

Every business needs a diverse set of skills and professionals that will help develop, improve, and grow the business.   Trying to handle everything by yourself puts you in a difficult position from the start because you don’t know what you don’t know. If you try to wear all of the hats, your business will not reach its full potential. Unfortunately, in an effort to save on expenses, new business owners often try to figure it all out on their own or hire friends and family that will work at low rates. Trying to cut corners for the sake of minimizing costs often costs more in the long run. Below are several important areas that require professional advice when starting a business:

a)    Real estate

b)   Insurance;

c)    Accounting;

d)   Tax; and

e)    Legal.

Retaining experts will help you build a solid foundation for your business. Regardless of the industry that your business operates in, you will need a business attorney to ensure that your business is operating within the applicable law and is taking advantage of opportunities.

  II.        Forming the Incorrect Business Entity

Choosing your business structure is one of the most important decisions you make as a business owner.  The type of entity that you choose to form will determine what strategies, advantages, and opportunities will be available to your business as well as the business’s obligations.

Most businesses form a corporation or a limited liability company (LLC) with a majority opting for the LLC.  LLCs provide a business owner with liability protection, management flexibility, and certain tax advantages when formed properly.  Forming the correct entity is extremely important, and you should work with a business attorney that understands the subtleties associated with this area of the law.  A mistake in the formation of your business can put you at a disadvantage from the start.

 III.        Neglecting to Protect Intellectual Property

With the ever increasing popularity and significance of technology, protecting your intellectual property (IP) rights has never been more important to your business.  If you want to secure funding or monetize your discoveries, protecting your IP is vital.

Your business idea and its expression, logo, unique designs, systems, and processes all form part of your business’s IP. Your IP is significant to the value of your business and can become the most important factor in profiting from your business.

Famous brands like Microsoft and Apple were only able to become as big they are because they zealously protected their IP.  Draft clear agreements to ensure that your business IP is protected regarding the work of independent contracts, employees, and even founders.  Properly worded clauses in agreements will help ensure this protection. Also, when appropriate, register your IP to strengthen this protection even more. 

 IV.        Failing to Implement Well Written and Easy to Understand Contracts

When starting a business, having well written organizational documents is key for its success.  Agreements should clearly define the roles and responsibilities of the organizers as well as equity and ownership structure. 

New businesses often gloss over this part of their business because they do not realize the importance of well written organizational documents. Well written documents anticipate possible disputes and anticipate how to manage them.

A lot of people believe that contracts unnecessarily complicate transactions, but it is always better to be proactive rather than reactive. If you had to choose between an expensive legal battle because of unclear terms and having to read through the contractual fine print that covers all the bases, you will pick the fine print every time.

Business owners should have their agreements drafted by a professional. A qualified business attorney will understand the nuances your business and can tailor your contracts to fit the specific circumstances of the transaction. Avoid “standard agreements” found online.  You may think these standard agreements can save you money, but you may only be digging a bigger hole for your business than you expect.  Working with a qualified business attorney will save you much more than the cost of those services.