5 Legal Questions Startups Need to Ask

Must Ask Legal Questions for Startup Businesses

Leading a startup means asking questions while you develop a robust network of business partners. This often includes a lawyer who can assist with everything from drafting contracts to advising on tax filings. Whether this is your first startup, or you are a serial entrepreneur, make sure to ask these five legal questions during the business development process.

1. Can We Use This Name?
Choosing a business name is an early milestone. Be careful about committing yourself to a name right away, however.

Start with basic online research. Can you find another business with that name? For example, does someone already operate at thatname.com or thatname.org or thatname.net? If the answer is yes, they may have registered a trademark that legally bars you from using the name.

In addition, some states and municipalities have naming conventions for their businesses. You must be compliant with all the regulations that apply to your geographic operations. Legal partners can help navigate the process of identifying a name that works for your circumstances.


2. What Type of Business Are We?
Startup businesses often have questions about creating their business entity, particularly in terms of what kind best suits the nature of the business. Forming the entity is important because it can legally separate your business liabilities from personal assets and provide a level of protection to both. If you are a sole proprietorship or dba and do not create a formal entity, you will not have this protection.

Once a legal structure is selected – LLC, C-Corp, S-Corp,  nonprofit or other – business owners are then responsible for registering for operation.  It is crucial to complete every step, so that you are not liable in the future.


3. When Should We Protect Our Intellectual Property?
It is never too early to think about legal protection for scientific research, new product designs, or your business logo and tagline. They are all aspects of intellectual property because your business would suffer if another organization tried to leverage them in competition. 

The precise timing to trademark can be difficult. Trademarking may be an unnecessary expense if the business has not yet taken off, but you want to be ready to file once the business is up and running.

Consider engaging a lawyer to identify the words and images that are entitled to protection, search the trademark database, and even prepare the applications for registration. 


4. What Sort of Contracts Does Our Business Need?

It is important to document everything in writing because those contracts will be invaluable if you ever end up in court. That said, the nature of the contracts are typically specific to the startup.  They likely cluster around four audiences:

·       Clients or customers
·       Vendors
·       Business partners
·       Employees

Getting a business lawyer involved with your contracts does not mean densely worded, incomprehensible legal documents.  Your expert will simply ensure the essentials are documented, so you do not have to worry about ambiguities in any of those key relationships.


5. Is Our Business Legal Right Now? 

There is a complex network of local, municipal, state and federal laws pertaining to business operations that startups must comply with from Day 1. For example, you may need to secure a license based on your company type and location.
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Failing to adhere to those laws can lead to fines, penalties and other legal liability. Worst-case scenario, your business could be shut down altogether.

Connect with a knowledgeable attorney and your municipal government to identify all the applicable rules and regulations. Also, consider developing a relationship with the government offices that regulate or inspect your business and go to them proactively with your questions.

Unfortunately, rules and regulations frequently change, so you also need to stay on top of keeping your business compliant.

With advance planning you can avoid the legal challenges that startups routinely face. Ask questions early and often while working with someone who understands startup legal operations. Contact us at SLN Law for more information.

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