Before starting a business, it is important to consult an attorney regarding the different aspects of starting a business and other legal traps to avoid. There are many things to consider such as the business entity, business structure, and the contracts involved. Here are some important questions you should ask your lawyer before starting your business:
What should I name my business?
Each state has different laws regarding the naming of a business. In general, the name for your new company cannot be the same as an existing one. It is also wise to avoid names that are extremely similar to existing ones due to the possibility trademark infringement.
If you want to trademark your business name, you must follow all the guidelines in order to be eligible for trademark protection. A name must have three distinct properties to be eligible to be trademarked: identify a good or service, distinguish the good or service from others, and be a source indicator.
What business structure should I choose?
There are many types of business structures such as a Limited Liability Corporation (LLC), Limited Liability Partnership (LLP), or corporation. The benefit of forming a business entity is that the business owners will not have to risk personal assets. Therefore the business owner is not personally liable for any losses incurred by the business.
If you choose not to form a business entity, the business can be a sole proprietorship, meaning a business with one owner. If you have business partners the business would become a general partnership. Under the law, the business and its owner(s) will be one entity and the owner will be personally liable for any debts incurred by the business.
For further questions regarding business structures, you can refer to our previous article discussing, in detail, the differences between different business structures and other business entities.
What should I include in my contracts?
There are several contracts that are needed in a business between the business owner and business partners, employees, and investors. A contract for a business and its shareholders should address issues including but not limited to: share transfers, dissolution of a partnership, and the actions taken if one or more parties do not follow through with the contract. Aside from the business contract, a business owner must also consider confidentiality agreements as well as contracts for daily transactions.
The contract is extremely important in reducing and resolving any disputes that may arise. A lawyer can assist with drafting contracts that are routinely used. It is crucial that all major contracts are drafted or reviewed by a lawyer.
How can I protect my intellectual property?
Registering a trademark with the U.S. Patent and Trademark Office (USPTO) can protect the name, logo, slogan, or packaging of a business. A trademark can protect anything used to identify or distinguish your business from others, but the business must meet the requirements set by the USPTO.
A copyright may also be obtained to protect any photographs, brochures, or websites. After the copyright is obtained, only the author has the right to publish or distribute the work in any form. If the business is built upon an invention or idea, it may also be wise to obtain a utility patent or design patent. A patent gives the inventor the sole right to make, use, or sell an invention for a certain period of time.
Often times, the most valuable asset in a business is the intellectual property. Therefore, intellectual property rights are crucial to the success of the business.
What risks should I watch out for? How do I minimize my risks?
Every business owner faces a set of risks unique to their company. As an employer it is important to obey state laws regarding regarding minimum wage, safety regulations, and all other employment related matters. There is also the risk of personal liability in the business if you choose not to form a formal business entity.
Risks can be minimized with a well-written contract, entity formation, and insurance. As an entrepreneur or inventor, it is important to consult an attorney before starting a business.