ll archives: How to Get Legit: Legal Considerations for Ladypreneurs


Creating a startup is both an exciting and a stressful time. When you’re trying to gather your thoughts, goals and dreams for your new company, you may feel tempted to dive right in and get started. Unfortunately, many startups don’t consider the legal stipulations or requirements that go into creating a new business. When legal mistakes or oversights are made at the very beginning, they can cause major problems as your company begins to grow. If legal issues begin creeping up further down the road, they may be more difficult to fix.

To ensure your startup starts on the right foot, here are a few legal considerations and mistakes you will want to account for.

Establish a Clear Agreement With Co-Founders

One of the biggest problems startups can have is not determining who owns what portion of the company and what each individual’s responsibility is. If you have co-founders who equally contributed to the creation of your business, you will want to establish clear boundaries, responsibilities and plans for each founder.

In a legal contract, you will want to determine who owns what portion of the company, what each founder does for the company and what should happen if one of those founders no longer wishes to work with the startup. You will also want to consider future plans, such as who can decide to sell the company, what expectations each founder should have and who will call the shots in day-to-day business decisions.

Do Research Before Naming Your Company

The name of your company becomes the star of your brand. This means you’ll want to decide on something that represents you, sets you apart and makes you easily recognizable for your customers. However, there is a good chance someone may have thought of your business name sooner.

To avoid infringing on trademarks or running into other annoying problems with another business, spend some time doing research about your potential business names. Find out if the domain is available, if the business name is already trademarked or if there is another company doing business under the name you want.

Determine Whether an LLC or Corporation Fits You Best

There are many different business forms, but they don’t all mean the same thing. Before beginning business under your startup, you will need to form either an LLC or a corporation, but it’s important to consider how each will influence your taxes or business setup.

The kind of business form you select will usually be determined by the number of employees you have and what kind of products or services you will be providing. The best way to determine which LLC or corporation fits best with your startup is to talk with an attorney.

Receive All Employee Documents

When hiring a team of employees to help you build your startup, there are a lot of documents you will need to fill out. While you may feel tempted to throw them to the side and just get going with your business, not having the right documents for your employees can really hurt you in the end.

You will need all your employees to fill out USCIS Form I-9s, IRS Form W-4, benefit forms, confidentiality agreements and employee agreements. If you are hiring employees from other countries or employees who do not have the proper documentation to work in the United States, you will want to work with an immigration attorney to get the right information.

Protect Your Intellectual Property

As you come up with new ideas for your business, you will want to properly protect them from competition or malicious employees. When you have an idea that is sure to be profitable, many people may be tempted to steal or expand on your intellectual property. By taking the proper legal steps to protect your product, idea or service, your startup can avoid future problems and focus on growth.

Throughout the development of your startup, you will want to use patents, copyrights, trademarks and more to protect your business and your ideas. You should also use confidentiality agreements, such as nondisclosure agreements, to ensure employees, partners or stakeholders do not share confidential information with other individuals.

There are many different things that go into creating a startup, but the legal considerations are some of the most important. When you skip legal regulations, standards or concerns because you’re anxious to get started or you’re unsure of what is needed, you’re guaranteed to run into a few problems in the future.

Take the time to properly address all legal aspects of your startup in the very beginning. With the right legal documents and considerations in place, your co-founders, employees and your startup as a whole will be better off.

Photography: Kelley Raye