As part of our law practice we represent entrepreneurs that are launching businesses and provide legal advice on everything from Wage and Hour issues to intellectual property protection. I thought it would be helpful to delineate here my advice to clients who are looking to start a new business. Even in this economy there are still niche, high growth companies launching regularly. Here are our Four Most Important Legal Issues for a Start Up Company:
1. Does the start up company have a valid legal identity? You would be surprised how many people think that by filing for and obtaining a fictitious business name ("d/b/a") that they have created a legal entity. But that is far from the case. A fictitious name is nothing other than an alternative company name-it is not a company, partnership or limited liability company. So make sure that your business is a legally recognizable entity under the applicable laws.
2. Is the start up company's intelletual property protected? This is a hot topic. There is a lot of misinformation out there on trademarks and intellectual property rights. People try to save money by not trademarking their brand name-and then spend 10 times as much money litigating the ownership of the brand name against a competitor. Protect your brand and product names-it is critical.
3. Have you also protected your company's trade secrets by having contractors, employees and potential investors or others you have shared your business plan with sign valid non-disclosure/confidentiality agreements? If not, then you have a problem. Non-disclosure agreements are critical to protect your company's strategic objectives, business plan and your brand. The best advice for entrepreneurs-trust no one-make everyone sign a non-disclosure and confidentialty agreement. Why take the risk?
4. Do you have a five year strategic plan for your business? A lawyer's advice is only as good as the facts it is based upon. Having a growth plan for your business aids your counsel in providing sound advice-and assessing legal risks. You MUST have a roadmap of where you are going and how you are going to get there. You particularly need to assess financial growth and head count since these factors impact application of certain state and federal regulatory laws to your business which your counsel will guide you.
So there you have it. This is our Top Four Legal Issues for Start Up Companies! Please email us with comments or questions.