If 2015 is the year you decide to strike out on your own and start your own business, there are some basic legal issues you need to take into consideration as part of your start-up planning. Here are our top 10 legal tips for entrepreneurs:
- Choose the right business structure. Most businesses start life as a sole proprietorship, but if you have personal assets to protect, you should consider operating your company as a limited liability company (LLC) or corporation. These entities will protect your personal assets from business liabilities and can offer you some tax advantages as well.
- Get insurance. Business insurance is a necessity for most companies, but especially important if you are operating a potentially risky business. Even if you are just starting out as a consultant, you could get sued by someone who acted on your advice and was disappointed with the outcome.
- Put everything in writing. All agreements with independent contractors, employees, vendors and customers need to be in writing.
- Partners need a buy-sell agreement. If you are operating as a partnership, you need to plan for what happens if one of you becomes disabled, dies or simply wants to leave. A buy-sell agreement allows you to do this.
- Understand employment laws. If your startup is dependent on work from independent contractors, you must be aware of what the law defines as a independent contractor vs. an employee or you could get in trouble with the IRS.
- Address your need for legal documentation. If you are operating as an LLC or corporation, there are legal formalities that must be followed in order to keep the asset protection provided by these entities in place. You will also need the proper legal documentation for confidentiality and non-compete agreements, vendor contracts and more.
- Pay attention to intellectual property issues. Not only do you need to protect your own intellectual property, you also need to ensure your new startup does not infringe on the IP of others.
- Create employment agreements. Protect your company against employees leaving with your ideas or customers with the proper employment agreements.
- Get professional help. Every new business start-up needs good legal and financial advice. A good business attorney will help you identify problems down the road that could potentially derail your new enterprise.
We can help you avoid costly legal disputes through proactive business planning, including crafting agreements and procedures to ensure you comply with state and federal law. To learn more about our personal approach to business planning, call us today to schedule your comprehensive LIFT™ (legal, insurance, financial and tax) Foundation Audit.