Startup

You May Need Some Legal Advice—7 Reasons Why Seeking Legal Advice Now Will Benefit Your Startup in the Future

Posted by on Jun 6, 2019 in Entity Formation, Governance, Intellectual Property, Startup, Your Entity

So, you’ve decided to start a business. You may be wondering, is it really necessary to consult with an attorney right now? The answer—it all depends on the nature of your business and how much risk you are willing to take. Small legal mistakes when establishing your startup have the potential to affect your business’ success and cost you and your startup financially in the future. We understand that hiring an attorney is daunting for a new business operating on a limited budget. However, there are a few business areas for which you should consider seeking legal advice early on in the life of your startup. 7 Reasons Startups Should Seek Legal Advice Now for Future Benefit: 1. Entity Formation: There are many different legal entity forms a startup may take—a sole proprietorship, general partnership, joint venture, limited partnership, corporation, or limited liability company. Each has pros and cons and different tax implications. Picking the right form for your startup has liability, legal, tax, and financial implications. While information on entity formation is available through the U.S. Small Business Administration and other resources, an attorney can advise you on which business structure is best based on your business plan and goals, as well as your personal liability and tax expectations. 2. Structuring Ownership, Control, and Responsibilities: If your startup has more than one owner, it is recommended that your startup have certain agreements prepared that outline the relationship between the owners—such as who has what responsibilities, who has the power to make certain decisions, each owners’ financial interest in the startup, and how to handle ownership termination. These agreements often take the form of operating agreements and buy-sell agreements for LLCs, or bylaws, restricted stock purchase agreements, and shareholder agreements for corporations. Ultimately, formal owner agreements help prevent future disputes and the need to hire a lawyer to resolve such disputes. Although such agreements may not seem like a priority in the early stages of your startup, they can be key to the future stability and security of your business. Additionally, these agreements are often easier to negotiate and prepare during the honeymoon phase of your startup, rather than down the road when money and emotions are involved. 3. Conducting Business Through a Website: If your startup conducts any business online, it is going to need a Privacy Policy and a Terms of Use Agreement. A Privacy Policy is a legal statement on a website that describes how personal data collected from users and customers of the website will be used. A Terms of Use Agreement is a policy on a website that describes the terms and conditions of users’ use of the website. Beware of blindly copying policies from other websites that offer similar services to your startup—often, policies are tailored to a specific business and will not provide you with adequate protection. An attorney can produce a custom Privacy Policy and Terms of Use Agreement for your website that provides you with the specific liability protection your startup needs. 4. Regulatory Compliance: Depending on the character of your startup’s business, you may be subject to state and federal regulations. An attorney can advise you on which regulations your startup is subject to and the steps your startup must take for compliance. 5. Protecting Your Startup’s Brand: Whether you plan to grow your company on a local, national, or international scale, you will want to ensure that your startup’s brand is protected. By acquiring a trademark in your startup’s name and logo, you can prevent other companies from using your name or branding (or a confusingly similar name...

Read More

Terminating Your Contract: Things to Remember Part 1

Posted by on Jan 16, 2014 in Startup

Contracts often have various provisions concerning when and how a party may terminate the contract. Typical termination provisions can cover situations in which the party terminates for cause or without cause. The distinction between the two types of termination clauses can be crucial to your contract rights and remedies. A provision governing termination without cause essentially gives one or both parties the right to terminate the contract for any reason, whether or not there has been a breach. Often called a “termination for convenience” clause, these provisions can have various effects on the practical terms of your deal, which you may want to consider when you’re drafting or negotiating your contract. For example, 1) If a termination without cause provision is going to be a part of your contract, consider how much notice you would like to have or give if you or the other party wants to terminate the contract without a breach. Things to consider would be how long it will take you to find another seller or service provider to fill in the void. 2) It is common for a service provider or seller to raise the price or quote a little bit in order to account for the fact that the other party may suddenly terminate the contract. Be aware of how the pricing structure works in your deal, and try to substantiate where the costs are attributed. 3) Consider your capital investment. Many times a termination without cause provision can expose you or the other party to losses resulting from a shorter contract period. If the contractual relationship is cut short early, the party may not have recovered their costs yet. Therefore, it is common to see some sort of cost recovery provision or penalty provision in the event a party terminates without cause. Stay tuned for more on termination for cause provisions. While there are many other issues to consider when you’re drafting termination provisions, these are just a few that you may want to keep in mind. You should always consult an attorney when you’re in the process of drafting and negotiating a...

Read More

Developing an App? Protect your Intellectual Property!

Posted by on Dec 4, 2013 in Startup

If your startup company is working on developing an app, remember that the app, or the development process, raises intellectual property issues that you should consider. For example: if there is a process or method embodied in the app, it may be something worth patenting the app may have a name that should be protected by a trademark the app may have terms used in connection with it that should be protected by a trademark the app developer may treat the app’s source code or other aspects of the app’s development as a “trade secret“ the content of the app itself should maybe be protected by copyright–if original (e.g. the app’s graphic, textual, images and artwork, database elements and software code) If you’re working on an app, or having an app developed for your company, please see an attorney for further discussion on how best to protect your IP in the...

Read More

Social Media, Marketing and Privacy Issues: Tips to Remember

Posted by on Nov 20, 2013 in Startup

Before launching a social media marketing campaign, consider the following: Be sure you disclose what information you collect from your audience, why you collect it, and how you use that information. Does your marketing campaign or website use “cookies”? If so, disclose it. If you do not know, ask your web developer (or someone else who could explain this practice to you), then disclose accurately what your site uses. Does your marketing campaign target children? If not, be sure to address this honestly- for example by prohibiting use of your site by children under the age of 13. If so, be sure you comply with the Children’s Online Privacy Protection Act. It would be a good idea to have a lawyer review your policies or advise how to comply with this law. Always remember to contact an attorney if you have any specific questions or...

Read More

Update! I-9 Forms and Immigration

Posted by on Oct 2, 2013 in Startup

Earlier this year, the U.S. Citizenship and Immigration Services (“USCIS”) issued a newly revised Form I-9 for use by employers. The Form I-9 is used to verify the identity and employment authorization of individuals who are hired for employment in the United States. Thus, all companies who have employees must ensure that a Form I-9 is properly completed for each employee. As of this date, employers should be using the revised form, which is available at: http://www.uscis.gov/files/form/i-9.pdf. The USCIS’s revisions to the I-9 form are subtle, in that USCIS simply: Added data fields for the employee’s: foreign passport information (if applicable) telephone number e-mail address Improved the form’s instructions Revised the layout of the form, expanding it from one to two pages (not including the form instructions and the List of Acceptable Documents) The revised form can be identified by the revision date “3/08/13 N” printed in the lower left-hand corner. Please contact an attorney if you have any questions about using the Form I-9 or your duties in verifying an employee’s identity and work...

Read More

What Types of Insurance Should I Have For My Business?

Posted by on Sep 18, 2013 in Startup

Branching off from our discussion of whether you need an entity for your business, one related issue that’s important to keep in mind is what types and amounts of insurance you should obtain and maintain with respect to your business. Whether the insurance policy is personal in nature (such as a policy to cover your personal automobile or home) or commercial in nature (worker’s compensation, professional liability, etc), insurance plays a vital role in the minimization and management of risks associated with the operation of your business. We will go over insurance that is more commercial in nature next time, but for now, we will talk about insurance that is more personal. What Types Of Insurance Should You Have? While the overall answer will ultimately depend on the nature of your business, there are some types of insurance, particularly personal in nature, that are always a good idea to obtain and maintain because they protect you on a personal level– no matter what happens to the business. To the greatest extent possible, business owners should strive to minimize and manage their personal risk so that their capacity to focus on the business operations will not suffer as a result of a personal loss. While this may seem like common sense, if you’re a business owner who also owns a home, you’re going to want to make sure you have homeowner’s insurance of an adequate type and amount, which can help protect you from accidents that happen at home or may have occurred due to your own actions. In order to run your business, you need to make sure your home, and items inside the home, is adequately protected–so all of your resources can be focused on the business. This concept also applies to business owners who do not own a home, but who rent. Renter’s insurance is equally as important if you are a renter to protect your home and items inside your home (which may or may not be useful in your business). While there are other coverages which probably seem like common sense (e.g. personal automobile insurance or health insurance), you probably get the point concerning insurance which is personal in nature and are more curious about insurance which is commercial in nature. We will visit commercial insurance coverages next time, but before we leave this topic, it is important to drive home one more point: Because many small business owners operate their businesses as sole proprietors (i.e. entities for which there is little to no separation of assets, profits, liabilities and obligations), it is especially important to consider how best to protect your personal assets which may directly or indirectly impact the operation of your business. If you have questions concerning insurance or how best to manage and minimize risk for your business, please talk to an attorney–or an insurance...

Read More