By Mariana Troia
So you want to be an entrepreneur, but have no idea how to register your company, write contracts, or pay taxes? Are you unfamiliar with local laws and regulations, but eager to set up your business? If this sounds like you, let’s talk about the value of an experienced legal expert for an early stage business.
At first, hiring a lawyer may not seem like an obvious decision for an early stage entrepreneur to make. The added value of hiring a lawyer when starting your business may not seem obvious at all, especially considering all the other costs you will inevitably incur when starting up a business. Working closely with a professional who has an intimate knowledge of the law can provide the clear understanding of how the legal system works and how your company should operate within it, which may alleviate problems that could arise further down the line. But before you go ahead and call up a local attorney, it’s best to pause and consider what kind of help you will need to make your startup thrive. Here are 7 pieces of legal advice to help get you started.
1. Seek Legal Advice Early on
By consulting a legal expert long before you start operating, you can avoid a lot of problems later on in the game. Lawyers are trained to foresee any issues that could be relevant to the future of your company. Speak openly about any questions you have, and don’t be afraid to ask for clarifications on confusing or highly technical terms.
Some things to think about in preliminary discussions include: finding a name for your company that will not pose any legal issues, registering your company as the correct legal entity to save you money on taxes, and making sure you have a clear deal with any co-founders. Start early, and you can save a lot of time and money.
2. Find a Lawyer with Experience that is Right for You
Although it can be tempting to turn to friends or family lawyers offering great discounts, it is important to consider whether they are fully equipped to handle issues relevant to your business. Don’t be afraid to ask the prospective lawyer whether they have relevant, specialized legal expertise in your industry. If your business is going to operate across borders for example, be sure to find someone with experience working regionally and internationally. Hiring a lawyer who has worked with startups before is a definite plus. If you’re having trouble finding someone, reach out to other entrepreneurs in your industry to ask for recommendations.
3. Create a Budget for Legal Expenses
It’s easy to overlook the importance of a good lawyer when you’re just getting started. Be sure to set aside enough money in your budget to cover legal expenses in the early stages of your business. Making space in your startup budget for legal costs can help to avoid heavy penalties, unnecessary fees or taxes later on. Speak with other entrepreneurs in your field to get an idea of what the average cost will be. Remember that negotiating rates is often a possibility. Talk to your lawyer to find a price and payment scheme that’s right for you.
4. Make Sure your Paperwork is in Order
Stay organized and keep good records to help your lawyer do their job well. Important emails, documents, contracts, licenses, and sales records will be useful items to have on hand. If you have trouble keeping things organized, consider hiring an intern with administrative experience. This will give you the time to focus on running your business and delivering a great product or service, while also making sure you are operating in compliance with the law at all times. Respect deadlines and submit paperwork in a timely manner to maintain a good working relationship with your lawyer.
5. Keep your Product Safe with Intellectual Property Protection
Is your startup centered around selling a particularly innovative product? What about an idea, software, code, or even service? Make sure your startup is protected by filing the appropriate paperwork. Though specific intellectual property protections vary by region, some common ones include: trade secrets, copyright, trademarks, and patents. Consult an Intellectual Property (IP) expert to determine which category is the best fit for your startup needs.
6. Don’t Forget to Make your Website Compliant
Does your startup operate website? Regionally, regulations for protecting consumer data and other types of information are changing. For example, in the European Union lawmakers have just passed a new set of regulations for protecting consumer data online, the General Data Protection Regulation. To learn more about this comprehensive new set of regulations affecting how websites can store and use data, you go here to learn more.
7. Don’t Let Legal Requirements Scare you Away from Entrepreneurship
Unfamiliar legal requirements can be overwhelming for an early stage entrepreneur. Though there are a lot of issues to keep in mind, having a good lawyer by your side can help you get through them with ease. Do some research, and learn about the many other benefits to having a lawyer when starting a business. Having the courage and vision to start your own business is the real challenge, don’t let a little paperwork keep you from realizing your professional dreams.
Mariana Troia is an undergraduate student at Yale University. She worked as a research intern at Child & Youth Finance International during the summer of 2018.
Photo Credit: Public Domain Pictures