When you are just starting a new business, legal guidance may not be the top thing on your to-do list. You will probably get busy with other aspects of establishing your startup, which will probably be a lot of work. After all, translating a business idea into reality is a humongous task, and there is much to manage, from financing to recruitment, operations, and more. Legal aspects tend to take a backseat because they do not appear as critical as other areas at this stage.
However, you may get into trouble with the law sooner rather than later, and not having an expert to get your business out of the fix can be fatal for the startup. No matter how smart you are and how bright the prospects look for your venture, a single legal issue can bring a massive setback. It makes sense to have proper legal guidance right from the start because it can be a lifesaver for your business. Here are some reasons why you need it even more during the startup stage.
Get advice about the choice of company structure
You will probably need expert legal opinion even before you take the first step. While starting as a sole trader or partnership firm sounds like the easiest thing to do, it may not be the best decision from a legal perspective. A startup lawyer is the best person who can guide you about the right structure that will help you limit your personal liability and save up on taxes in the long run.
They will probably recommend incorporating a Limited Liability Company because it is beneficial on both fronts. The right choice at this stage can save you from hassles eventually, so never go ahead without guidance.
Prevent founder disputes
Most startups have co-founders, which is also a good thing because you have help and expertise at hand, and risks are shared as well. But when you have partners, there is always a likelihood of disputes in the long haul. Things get complicated if they reach the court, and it is the last thing you will want to encounter.
Creating proper agreements at an early stage can prevent disputes and issues later. A legal expert can help you draft a proper agreement that clearly apportions the rights and responsibilities. Typically, a founders’ agreement should also include the clauses for a voluntary exit of founders and the process for dispute resolution so that things do not turn bitter.
Steer clear of lawsuits
When you enter the business landscape, you need to be prepared for lawsuits because you may face them time and again. Personal injury lawsuits are common as you may encounter them due to accidents with business vehicles, premises mishaps, and defective products. A personal injury lawyer can help you frame policies that have you covered.
Business lawsuits can extend beyond civil lawsuits, and you may face criminal cases for frauds committed by employees. Having an attorney to defend you against criminal charges can save you from a major hassle. While you may not have one in your team, it makes sense to be in touch with an expert so that you know where to get help when there is a need.
Set up employee contracts and policies
Startup owners often overlook employee contracts and policies in the early phase because of a lack of experience and small team size. But doing so can cause big trouble if you have disputes with employees or fail to comply with employment law regulations. It is vital to seek legal guidance at every stage of employee contracts. You will need to have proper contracts with the right language and clauses.
Contracts should cover details like wage structure, holidays, appraisal, and termination. Also, ensure that you are on the right side of the minimum wage standards because non-compliance can lead to legal tussles and reputational damage to the company. Involving a tax attorney at this stage is also a good idea.
Create proper service agreements
Another danger zone for startups is service agreements because one that isn’t properly drafted can bring legal trouble from the clients. New companies are more susceptible to over-promising and under-delivering only to secure new clients. Not having proper service agreements opens your business to liability for missing out on deadlines or failing to deliver quality.
The best way to stay safe is by drawing up a proper agreement, and only an expert lawyer can guide you in this context. Hiring one may seem like an additional expense, but it is worthwhile considering that strong contracts can save you from lawsuits. Further, avoiding lawsuits protects your reputation in the market.
Secure business premises
Running a successful startup also requires you to operate from appropriate business premises. You need to make sure that the space is large enough to accommodate your people and processes. A factor that you can overlook is the zoning of the property for your industry. Failing to comply on this front can get you into trouble with the authorities and even disrupt your operations.
A lawyer who specializes in commercial law contracts can help you review the property lease and decide whether it is compliant. You cannot rely on the word of the landlord, so this professional can get you on the right track. They have the right experience to provide additional inputs about the feasibility of the location in terms of commute distance and competitive scenario.
Legal guidance is the last thing you should overlook, no matter what the size, scale, and domain of your startup. Although this aspect may not apparently demand immediate attention at the starting stage, the sooner you get it, the better it is. Legal guidance from an expert keeps your business safe from disputes and failure to comply with regulations.
You may even prevent several issues rather than encounter them and resolve lawsuits. The best way to start is by finding a professional you can trust. For handling specific requirements such as personal injury and criminal lawsuits, look for ones with the relevant expertise and experience.