As the startup creator, you have to think about products and services, branding, marketing, hiring, and more.
In order to ensure you don't have to deal with any unexpected fines, lawsuits, or legal threats, this guide will cover all you need to know in terms of legal advice for business start-ups.
We'll go over top tips to follow when starting your new business to make sure you're following the law, as well as some legal must-dos in terms of taxes, licenses, workers, and data protection too.
Choose the Right Entity
One of the first bits of startup legal advice you'll often hear when consulting with lawyers and legal experts is to make sure you choose the correct business entity for your startup. This is vital because it directly impacts taxes, funds for your business, and your liability.
There are a few different entity options to choose from, including sole proprietorship, partnerships, C-corporations, S-corporations, etc. Carry out research or consult with a lawyer to learn more and make sure you choose the right structure.
Make Sure You Have All Necessary Licenses and Permits
Depending on what sort of business you're running, you may require different licenses, permits, and other official approval documents to actually allow you to legally operate your business. If you're running a bar, for example, you'll need a liquor license.
Again, there are a lot of different permits out there, so research is vital here, and you may also want to consult with legal experts in your industry or get in touch with local authorities to find out exactly what papers you need to get before you start conducting business.
Keep Your Books in Order
Another essential piece of startup legal advice is to make sure your bookkeeping is organized and correct; businesses need to keep records of transactions and accounts, and this is a genuine legal obligation in most cases.
You need to ensure that you have an adequate, well-organized bookkeeping system in place, recording all transactions and safeguarding those records for future reference. This can be beneficial later on when it comes to doing your taxes, which leads to the next point.
Pay Your Taxes - All of Them
It should go without saying that any startup, or indeed any business, needs to pay its taxes. This can include income tax, sales tax, and other types of tax, depending on the structure and nature of your business.
Unfortunately, it's pretty easy for minor mistakes to be made and oversights to occur regarding business taxes. So you need to ensure that you're aware of all the necessary tax obligations, and you may want to hire your accountant or tax expert to handle the tax side of the business for you.
Classify Workers Correctly, and Don't Forget About Insurance
A common mistake that many new small business owners make in the early days is the misclassification of workers.
When hiring a worker, you need to note whether they're an independent contractor or an employee. This is crucial for tax reasons, and you could face penalties for misclassifying an individual. What's more, when it comes to employees, you need to make sure you're protecting them with workers’ insurance.
This is a must-do in all states except Texas for most businesses, and it's vital to have an insurance plan in place right from the first day of each employee's work to protect against any possible accidents and injuries.
In the modern world, a lot of business is done online, and vast reams of data can be gathered and stored by the average company.
You might start building up enormous databases of customer names, addresses, phone numbers, and so on, and it's vital to protect that data according to the latest standards and regulations.
Make a Founders Agreement, and Put it in Writing
A key piece of startup legal advice for businesses with more than one owner is to make sure that you have a founders agreement before the company is established.
In this agreement, you and your fellow co-owners can outline your roles and responsibilities for the business moving forward. This agreement isn't just helpful for clearly identifying the role of each owner.
Still, it can also be a vital legal document in the future if any disagreements or complications arise concerning business ownership. Having an agreement signed and in writing can help you avoid a lot of trouble.
For the Best Startup Legal Advice, Contact the Professionals
As stated right at the beginning of this article, starting a business isn't easy. It's always a challenge, requiring a lot of hard work and effort, but if you're willing to put that effort in during the early days, weeks, and months, you can set your business up for success.
You'll need to ensure that everything you're doing is in line with the rules and that you're covering all your bases from a legal perspective, and if you're unsure about anything, the best thing to do is consult with trusted legal experts.