Start-Up Business Lawyers

What Is a Start-Up Business?

A start-up is an undertaking that has recently begun operation.  Starting your own business can be an exciting financial endeavor with many potential legal pitfalls. An effective business plan will help to protect a business from many of these legal problems.  When starting your own business, the business plan should consider the following: 

• Capitalization
• Labor and Employment Issues
• Intellectual Property Risks
• Business Entity
• Confidentiality

Capitalization

The business plan should address the adequacy of capitalization, the amount of cash and assets invested to start and operate the business.  To minimize the legal risks created by improperly funding the company or misrepresenting facts to investors:

• The business should have the initial assets reasonably necessary to meet its reasonable debt obligations
• An owner should not mislead investors as to the amount of capital needed to start and operate the business
• The owner should use spreadsheets outlining in reasonable detail the amount of the projected startup costs, working capital, capital expenses, operating expenses and revenue

Labor and Employment Issues

The business plan should describe the duties and responsibilities necessary to achieve business success, and should carefully assess staff hiring.  To minimize the legal risks of claims by investors, owners, and employees, a company should consider: 

• Assigning a manager or team to each responsibility
• Describing the basic process or strategy used to manage the identified responsibility
• Ensuring the proper identification and assignment of the duties
• Using background searches and references to maximize chances of hiring qualified and trustworthy staff

Intellectual Property Risks

The business plan should address the intellectual property ("IP") risks impacting the business.  Some steps to minimize those risks and maximize IP value include: 

• Identifying the key IP
• Implementing a strategy to protect and enhance the IP, such as filing a trademark, or patent application, or using confidentiality agreements with employees
• Assessing the impact should the business experience a challenge to its IP

Business Entity

The owner should carefully assess the choice of entity he will use when forming the business.  Options include a sole proprietorship, partnership, and corporations, among others.  The entity selected will depend upon business goals, the number of owners, and the owners' role within the company.

Confidentiality

A company can protect the confidentiality of sensitive information primarily by:

• Requiring individuals to sign a non-disclosure agreement ("NDA") in advance; or
• Limiting employee exposure to sensitive information.

Do I Need a Lawyer?

The start-up industry poses many potential legal complications. Consulting with legal counsel prior to negotiating any formal contracts or IP privileges is always a wise thing to do. Speaking with the appropriate lawyer will inform you of your rights and protect your interests.