Startups

After years of working for someone else, you may feel like you have what it takes to start your own business. But there is a lot to do when starting a new business, even for a sole proprietorship.

A startup lawyer can help you through the business entity formation process, make sure you have intellectual property protection, and avoid any legal problems down the road. Many business law issues are based on state law, so make sure you have local legal counsel to answer your legal questions when starting your own company.

Are You Ready To Start a Small Business?

When you have a marketable idea or see a gap in the market, it may be time to take the next step and go forward with your startup. A startup is a business that is in the first stages of getting established. Startups generally start with one or more small business owners putting in their own money to get the new business off the ground.

These are some questions you may want to ask yourself to know if you’re ready to move forward with a formal business structure to take your business ideas to the next phase.

• Are you inspired and excited?
• Will you need partners at the start?
• Do you have the time and energy to take on the job?
• Do you have the resources to invest in the company?
• Do you know the market you’re getting into?
• Do you have a business plan?

What Do You Need for a Startup?

After having an idea and the commitment to take on the job, you probably need money. Even if you have some money to invest, at some point you may need to raise funding. This can be a small business loan, borrowing money from investors, or taking on a partner to invest in your new business startup. Anytime money gets involved, make sure you have the legal documents in place to protect your investment.

One of the most basic things a bank might need is a proper business plan. Your plan should address how much funding you need with a financial forecast for projected income and expenses. You may also need to establish your company as a legal entity. A startup attorney can help you determine which incorporation legal structure is best for your business.

Do I Need a Founder’s Agreement?

Many startups begin with business ideas between close friends or family members. Although it seems like you are all on the same page, things may change down the road. A partnership agreement before you get started can help establish everyone’s rights and obligations under the business formation.

Startups often begin with the founders contributing all the time, effort, and money that they have. However, this often involves conflicts with family, money, and outside interests. If one founder ends up putting in more capital, they may expect a larger share of the potential profits. Business owners should establish a founders’ agreement to avoid future disputes.

Investment and Securities Compliance for Your Startup

Many startups are not well-versed in securities laws because they start small with money from their savings and family. However, it is important to get legal advice when you are seeking investments from shareholders, or you could run afoul of federal securities requirements. Early-stage investment options may include:

• Common stock and preferred stock
• Membership interest
• Stock options
• Restricted stock
• Convertible note
• Debt

Do You Need a 409A Valuation?

If you are trying to raise capital to finance your business, you may have to get a 409A valuation. The valuation can determine the value of the company, stock, and strike price. Prior to the Enron scandal, businesses had more flexibility to price stock options. Now, startups may need an IRS 409A valuation to protect against tax problems.

How Can a Business Lawyer Help With a Startup

There are many legal issues that come up when starting a new business, from real estate leases to shareholder agreements. Unfortunately, many entrepreneurs are so focused on their new business ideas that they forget about the need to handle the small stuff. Making sure your business is in compliance with local, state, and federal legal matters can help you avoid complications in the future.

Investing in an experienced business attorney at the start can help avoid more costly problems when your new company is worth a lot more money. A lawyer can also help you avoid personal liability if your business ever fails. Contact an experienced business lawyer for legal help with your new startup.