You are probably unaware of it, but August 1st is National Startup Day. Startups are a part of what makes entrepreneurship part of our American culture. In this country, the newest idea is the hottest one on the market, and if there aren’t new ideas, we are trying to perfect old ones. Yet, having a prosperous startup is far from easy. Once an idea for one is envisioned, there are some legal steps a soon-to-be business owner must take. Here are a few:
You might just need to get an attorney.The laws applying to startup businesses apply on a case-by-case basis. Depending on where the startup will be, it might be required to register with the state in order to be recognized, or it may require specific licenses and permits. Furthermore, you might have to strictly conform to the state law governing the business form, or you may end up losing out on benefits from those same laws. These are things that a lawyer is equipped to know by trade.
Budgeting is key.It’s important to allocate your business’ expenses according to departments and to get very specific within each category. Use cash flow projections to realistically measure your monetary needs, not feed your dreams. Never forget to make monthly budget revisions, especially when new circumstances arise. Life happens.
Pay attention to lawsuits regarding small business. Your attorney can help you with this one, but it is always good to keep yourself informed on these legal issues in order to learn from other startups’ mistakes. Some cases include Jay Biederman v. Domo Inc.where a former manager sued a software startup trying to attain financial statements in order to assess how much his shares in the company were worth. Startups have an interest in keeping secrets, especially when they relate to intellectual property, but they could be required to open their books to shareholders if incorporated in certain places like Delaware.
Be sure to have clear and concise contracts.The first step to knowing what you need in a contract is knowing which ones you need to begin with. You will do well by putting things in writing, such as any sales and services contracts, employment contracts and partner agreements, as well as your lease. It is crucial to hash out all possible issues with a well-drafted contract from day one. Avoid pulling forms from the internet or re-using old contracts. Boilerplate language in a contract can get you into a lot of legal trouble.
Think of the possibility of future layoffs.Most employees are considered to be “at-will” employees, meaning that they can be terminated for any reason. If concerned with a reason you plan to give, talk to an attorney to determine what is in your best interest. Also, using objective, performance-related criteria can allow layoffs to be less biased.
If you are thinking about starting up your own small business, we are always happy to help with any questions or concerns. Feel free to call The Kendrick Law Group at 407-641-5847 to set up a consultation with one of our experienced attorneys.
Co-written by Alekssandra Lopez, Law Clerk