Building a startup company takes vision and great ideas. But before you can get up and running, it also requires legal understanding and planning. Startups need to go through steps to protect the owners and the organization. Before you start doing business, make sure you have worked through these preliminary steps.
Create a Legal Entity
When you set up a business, you should create a separate legal entity under which you will operate, typically a corporation or an LLC. Identify the place you want to incorporate and set up to legally operate in all of the places you want to do business. You also need to set up your finances to ensure the assets of your company remain separate from your personal assets and file all the relevant paperwork to set up. This keeps someone from being able to attack your personal assets over a dispute with your business.
Agreements and Contracts
Besides protecting yourself from outside risks, you need to make sure inside disputes cannot derail you. Any agreements you have with co-owners or investors need to be in writing and should contain terms which you are comfortable with. You should include a vesting schedule within your agreements in order to prevent someone from getting cold feet and leaving early with his or her ownership interest. You also want to set rules for bringing in new or replacement owners.
In addition to setting up, startups need to anticipate and plan for ending operations. What criteria need to be in place for the business to sell? How will owners divest their interests if you choose to part ways or close down? Startups eventually end operations, and you need to plan before the moment arrives.
Protect Your Intellectual Property
When you plan your company, you do so with ideas in place. Before you begin operating, you need to develop patent, trademark, and/or copyright protection for the products or methods that will come from your ideas. This ensures no one else can steal and run with them before you are able to build up your business.
Ensure Legal Compliance
Finally, you need to understand the laws and regulations that govern your operations. If you are non-compliant, whether in corporate, tax, or securities law, you can lose the business and more.