Setting up an upstart is such a commitment. However, with legal matters not covered, your business may end up struggling with lawsuits that could lead to death! The legal issues can be complicated and confusing for a person setting up a young upstart. Let us simplify them by creating a simple startup legal checklist you can use as you launch your upstart.
Select a proper business structure
For starters, you need to set up the right business structure for your startup. The business structure you select determines how much tax you are entitled to, fundraising ability, hiring ability, and your liability. If you register your business as a C corporation or Limited Liability Company, your liability is separate from the business. Again, these two structures give your business room for growth, and you can hire employees freely. However, if you want to seek funding from an investor, a C corporation is the best choice but you are entitled to double taxation. If you intend your business to stay small with only a few employees, Limited Liability Company is the best choice.
Obtain Employer Identification Number (EIN)
You can obtain an employer identification number from the IRS. Your number acts like a social security number or tax ID. It is a requirement if you want to have employees or open a bank account for your business. Again, you need the EIN to file your business tax return properly.
Protect your Intellectual Property
Imagine investing in an idea only for it to be ripped off, and the perpetrator starts making a lot of money from it. Intellectual Property includes trademarks, patents, copyrights, and trade secrets. Legally protect your Intellectual Property to prevent other traders from using them. Ensure that you do not use another trader’s Intellectual Property as it can also land you into legal tussles.
Establish your insurance needs
As a startup, you need to establish your insurance needs by identifying potential liability through risk assessment. With an insurance cover on the liabilities, you will not have to incur expenses for the claims with your own finances. It can be a drawback for a young business. One of the major and almost inevitable risks with potential liability is workplace accidents. According to personal injury lawyers, you need to have the right insurance cover to protect your employees against workplace injuries. You do not want to get into legal tussles with employees, so take measures to protect them.
Ensure you have the required licenses to run your business
Legal documents are an indication that your business is legitimate and you have met all the state, federal and business regulation. They include business permits and licenses, certification, and memorandum of understanding, etc. Having the legal documents protects your business from financial losses and business failure attributed to fines, penalties, or lawsuits.
Know the taxes you are entitled to pay
Your tax entitlement is dependent on your business structure. Ensure that you understand the taxes you are supposed to pay. It will save you troubles with the taxman that can hurt your startup.
Have the right employee contracts and agreements
Before recruiting an employee, let them sign employment contracts and agreements. Signing them ensures that there is clarity between you as the employer and all the employees. The contract and agreement should define their employee roles and responsibilities, terms and conditions of employment and non-disclosure agreement, etc. Further, classify your employees as either permanent, casual or a contactor to ensure that you handle matters benefits correctly.
Do not haphazardly launch your young upstart. Ensure that you have met the legal requirements to avoid legal issues. In case you have trouble meeting legal requirements, do not hesitate to seek guidance from professionals who can help set you on the right side of the law.
Author Bio: A lead content planner and a former legal assistant at district administration, Donald Matts, has been helping young entrepreneurs curb out of the dark, and become the next unicorn.