9 Legal Precautions to Take When Starting Up
Let’s be honest, the legal system is confusing, and usually makes little sense to an outsider. As first time entrepreneurs, it very difficult figuring out where to start. Follow the nine steps below to avoid common pitfalls, and get your company started off on the right foot.
Find a lawyer you trust. A good lawyer is worth the investment, within reason. It costs much more to repair legal mistakes than it does to do it correctly the first time.
Incorporate (talk to a lawyer about what legal form your company should take).
When you find a name, make sure no one else is already operating under that same name and that the trademark, URL and social handles you want are available.
Register and trademark your name and logo.
Draft a corporate charter (Bylaws or LLC agreement) that outlines your business purpose. This helps determine which industries your trademark will fall under and also establishes your accountability to your investors.
If you are raising money from investors, decide how much you want to raise, how much you are willing to give away, and what form you want the financing to take (loan, equity or a combination).
Create a cap table using an excel worksheet to plug in numbers that show how much ownership each party has over your company. A cap table lays out ownership dilution scenarios so that you know how much stock to give employees, advisors and investors without giving away too much of your business.
Make sure you maintain ownership over all of your intellectual property. Outsourcing labor to a creative professional can help with the quality and quantity of your work, but make sure at the end of the day you own the final product.
And finally, our favorite…
Don’t be afraid to ask questions if you are unsure about anything. It could make the difference between success and failure for your company in the future.