Forming a new business is an exciting adventure. However, new business owners must ensure that they take steps to protect themselves and their business. A simple overlook could have very serious implications down the road. Before taking any steps, consult with an experienced business lawyer in Los Angeles and sort out the following:
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Business Structure
Prior to forming your new business, you should first determine which business structure would work best to fit the needs of your company. Some of the more common structures include LLCs or C corporations. More important is the capitalization table of the company. A lot of thought and strategy goes into how much equity owners and investors will control. Are you going to fund the company initially with debt, equity, or a combination? At what valuation? How much equity will you be left with after a few rounds of investment? All of these questions should be carefully examined at the initial stages of formation.
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Protect Your Intellectual Property
Work with your attorney to determine if you should file for any type of copyright, trademark, patent protection, or any other ways to protect your company’s intellectual property. IP protection will become of particular importance as the company matures, as other businesses will most likely attempt to emulate or “borrow” from a successful business.
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Money Management
Once you have settled on a business structure, determine the tax obligations. It could be a bad start for your business if the IRS begins to focus on you for improperly filing taxes. It is a must to create a separate bank account for your company funds. This should be kept completely separate from all personal accounts. Co-mingling personal and business funds could cause serious issues down the road.
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Technicalities
Online startups have an additional responsibility to maintain compliance with internet standards, while protecting the company at the same time. This will require the new business owner to work with his or her business attorney to draft privacy policies, disclaimers, and terms of service. It is also very important that you adhere to those policies that are put in place.
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Contracts
There are three main types of contracts that new businesses should work with a professional to implement. The first is a Non-Disclosure Agreement. These agreements work to protect confidential information from being improperly used by potential investors, customers, or other third parties that may need to have access to the company’s business.
The second type is a form of employment contract and an independent contractor agreement. Both employee and independent contractor agreements should outline the rights and responsibilities of those working, the duration of service (employees should be at-will), as well as the appropriate and expected service.
Finally, to the extent the company has more than one equity holder, business owners should work with a professional to draft a shareholder agreement or buy-sell agreement. Such agreements detail what would happen in the event of death, disability, or voluntary resignation of an owner or founder choosing or if a founder or owner want to transfer his equity to a third party.
The above list is far from exhaustive. Creating a new business is very challenging and it is imperative that all legalities and technicalities are met. Contact an experienced business attorney in Los Angeles such as Afshin Hakim of Hakim Law Group to assist with the development today. To learn more about how Afshin Hakim Group can help you set the proper foundation for your startup please visit www.HakimLawGroup.com or contact HLG at (310) 993-2203 to schedule a consultation.
