Legal Issues Every Startup Business Owner Needs to Know About
As a startup business owner, you’re probably constantly thinking up new ideas and ways to grow your company. Whether you’re just getting started or have already gotten past the initial startup phase, it’s important to understand the legal implications of your actions as an organization. Legal issues are something every startup needs to be aware of, as they can impact everything from hiring new employees to launching a marketing campaign. These documents and contracts help protect your company and its assets from potential risks and liability. The details of legal issues may seem overwhelming, but with the right knowledge you can be confident that your business is well protected. Keep reading for information on some of the legal issues every startup should know about.
Confirming Company ownership
Before you can successfully grow your company, you first need to know who owns it. You’ll want to confirm that you and the other people involved in the startup are listed in the correct order on the business’s ownership documents. In many cases, the first owner listed on these documents will be the person who finances the company. This is why it’s important to consult with a business attorney when setting up your company’s ownership structure.
Business incorporation and LLC formation
Business incorporation and the formation of an LLC are two legal issues every startup needs to consider. Both of these documents help protect the business’s assets and shield its owners from liability. Entering into a partnership with other entrepreneurs is another way to shield your company from liability. Partnership agreements are legally binding documents that outline each partner’s share of funding, responsibilities, and rights in the company. If you choose to incorporate your business or form an LLC, you’ll want to select an entity type that matches your company’s goals and objectives. It’s important to consider the tax implications of these business structures as well.
One of the most important legal issues every startup should know about is the hiring process. Legalities surrounding hiring employees are different from those surrounding hiring contractors. Therefore, it’s important to understand the difference between an employee and a contractor so you can hire the right people for the job. The Fair Labor Standards Act (FLSA) dictates that employees are entitled to a minimum wage, overtime pay, and other benefits. Contractors, on the other hand, are self-employed individuals who are not entitled to these benefits. To determine whether to hire an employee or contractor, you’ll want to ask yourself a few questions. Does the person have the skills and expertise needed to perform the job? Will the job produce an ongoing revenue stream for the company? Will the person be working for the company for an extended period?
Launching Marketing Campaigns
Marketing campaigns can have a significant impact on your company’s growth and overall success. However, marketing campaigns can also get you into legal hot water if you don’t follow certain guidelines and regulations. Marketing campaigns that are sent to individuals on a mass scale, called “broad-based.” The Federal Trade Commission (FTC) has specific regulations and guidelines for these mass marketing campaigns. If you’re planning on launching a broad-based campaign, you’ll first need to register with the FTC. For example, if you’re planning to send out emails to promote your new product, you’ll first need to provide the recipients with a “disclaimer” that informs them about your company, where the email came from, and how to get off the mailing list.
Establishing Company Boundaries and Limitations
As your business grows and expands, you’ll want to make sure you’re not entering into agreements that could cost you in the future. This is why it’s important to establish boundaries and limitations with potential partners and clients. For example, if you’re entering into a partnership with another company or investor, you’ll want to make sure the contract is fair and equitable. Partnering with a well-known company or person can bring a lot of benefits and publicity to your business, but you have to protect your interests at the same time. You’ll also want to make sure you’re not making promises you can’t keep. For example, if you promise a client that you’ll have a product or service ready by a certain date, you need to make sure you honor that commitment.
Financing Your Company
As your business grows and becomes more successful, you may need to look into financing options to help fund future product development and expansion. When you’re seeking outside financing, you’ll want to make sure you’re partnering with the right people and organizations such as accounting firms. This means you’ll need to conduct thorough due diligence and research to make sure the partner is legitimate. Investors conduct thorough due diligence on your company as well. They’ll want to make sure your business is ready for the next level of growth, and that it has the infrastructure and funding needed to succeed.
As a startup business owner, you want to make sure you’re prepared for anything. Legal issues are one of the many things every startup needs to be aware of. These documents and contracts help protect your company and its assets from potential risks and liability. In the process of growing your company, it’s important to be aware of the different legal issues and how they can impact your business. By taking the time to understand and navigate these issues, you can rest easier knowing your company is well protected.