Congratulations on starting your business venture! You’ve taken a bold step forward, now it’s time to learn more about the nitty-gritty part of entrepreneurship.
If you’re like many small business owners, your hiring priority would go to marketing, sales, and administrative staffing. Legal issues probably won’t be of your immediate concern. Besides, what’s the worst that could happen? Getting the business off the ground should take higher priority.
While your immediate priority is understandable, smart business planning also requires preempting problems so that you can prevent them by making sure that your business is protected by working with an attorney earlier in your business process. It’s similar to having an insurance policy to protect your business from potential trouble that may cost you financially.
Here are four main ways of how having your own company attorney can help you and your business:
1. Corporate Governance
While most corporations will use an attorney to help with the process of incorporation, new businesses sometimes neglect the on-going legal requirements to maintain their corporation status.
Annual shareholder, director, and partner meetings need to be held, and recording of minutes and the election of officers must conform with state requirements. Failure to do so could jeopardize corporate status and result in “piercing of the corporate veil” in the event of a lawsuit or other legal action, exposing corporate officers to personal liability or other legal problems.
2. Intellectual Property
Many intangible assets of a business should be legally protected. A company’s name, logo, brand name, and distinctive goods and services are entitled to copyright protection. Proprietary computer software, semiconductor chip mask designs, vessel hull designs, and many other creations may be eligible for trademark registration.
Patents are often thought to cover only machines and other manufactured products, but can also protect processes, such as a method for refining petroleum, or new compositions of matter, such as chemical compounds or mixtures. Trademark, copyright, and patent registrations can help a business protect the things that give it a competitive advantage in the marketplace.
3. Employment Agreements
Many companies, especially technology companies, consider the knowledge of their employees as some of their most important assets. Yet they fail to protect those assets through non-disclosure and non-compete agreements with their employees at the beginning of their employment.
Inevitably, some employees will leave the company, and it’s important to protect your business against their taking their knowledge of trade secrets with them over to the competition.
4. Exit Strategies
Entrepreneurs sometimes are so focused on starting a new business that they don’t consider what happens if one of the principals leaves the business. When a partner or major shareholder decides to suddenly exit, it can potentially threaten the ability of the business to continue operating. Closely-held corporations need to have buy-sell agreements or buy-back agreements to ensure that partners or major shareholders can sell their interest without legal entanglements or placing an undue financial burden on the company.
What about the cost of dealing with all these issues? Good lawyers are not cheap, but then again neither is any other consultant critical to your business. A brief consultation with a lawyer can often determine what a business’ legal needs are. An investment of a lawyer’s time, like a fire code inspection or medical checkup, can help prevent major problems down the road.
Business ventures involve quite a few legal manoeuvres and know-hows. While entrepreneurs must wear several hats in order to achieve some level of success, sometimes it’s best to leave the more complicated matters to the experts.
If you have just started your new company and are in need of a consultation, feel free to get in touch with us!
Please note that this article does not constitute express or implied legal advice, whether in whole or in part. If you require legal advice, please contact me at firstname.lastname@example.org