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What Is a Startup Business?

A startup 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 company 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: where is the money coming from;
  • Labor and Employment: your hiring and pay structure;
  • Intellectual Property Risks: protecting your work and not stealing works of others;
  • Business Entity: the structure or type of company; and
  • Confidentiality: how to keep propriety secrets secure.

What Should You Consider When Creating a Start Up Business?

Compared to a traditional small business, startups normally have different challenges. For example, most startups do not rely on traditional business financing (such as small company loans). Instead, they actively seek capital, or starting money, from  “angel investors” or venture capital firms. These investors balance the startup’s costs, potential return on investment, and other factors when deciding to invest. 

Before founding a startup, you should:

  • Create a comprehensive business plan, including an exit strategy if you need to close the business;
  • Determine which business structure (such as an LLC or S corporation) meets your needs;
  • Assess your needs for business licenses;
  • Consult with a company lawyer about the different state and federal regulations that impact startup businesses; and
  • Making sure you understand the tax liabilities involved in your establishment

How Can a Lawyer Help a Startup Business?

It can be difficult to understand and anticipate a startup’s legal issues without a lawyer. A lawyer (or lawyers) can ensure that you properly:

  • Structure your company or enterprise
  • Meet licensing and regulatory expectations,
  • Comply with labor and employment rules,
  • Protect your ideas through patents, trademarks, and copyrights,
  • Negotiate and enforce your contracts, and
  • Comply with SEC regulations.

When Do Startups Need Lawyers?

There are many common situations in which you would need to get an experienced startup lawyer involved: 

  • When You are Dealing with the Government: You do not want to violate any laws while opening a startup and making sure you are doing business in a way that does not create unnecessary tax liability.
  • Review of Contracts: Contracts can be complex when dealing with vendors, suppliers, and other customers. An experienced contracts lawyer can assist you in review and negotiation of contract terms.
  • Hiring Employees: Lawyers can assist in the hiring process and drafting employment agreements
  • Obtaining Patents and Trademarks: A startup lawyer can help do trademark searches, filing patents, and making sure you are not violating any intellectual property if you have a product.
  • Establishing a Business Entity: A lawyer can help establish a company  entity of some sort (LLC or corporation) to protect you personally from business liabilities

Do I Need a Lawyer for My Startup Business?

Founding and building a startup can be a lot of work and complicated at the same time. Contact a local business lawyer who has experience dealing with startups. Your lawyer can help you build a thriving business that complies with state and federal laws. And, an experienced business lawyer can ensure that your interests are protected through well-drafted contracts and intellectual property filings.

Photo of page author Ki Akhbari

, LegalMatch Legal Writer

Last Modified: 04-11-2018 08:15 PM PDT

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