At a minimum, a successful startup requires a great idea and the drive to execute it. In addition, an appropriate legal infrastructure  – business structure, intellectual property protection, and formalized relationships with co-founders, employees, business partners, and investors – will guide, shape, and protect future growth. Doing this efficiently and cost effectively is also critical. With that in mind, below are essential legal considerations every founder should address while launching their business.

Legal Considerations for Startups and Emerging Businesses

Entity Selection and Formation: Selecting  the best business type (e.g., corporation, limited liability company, partnership) involves balancing several immediate goals and needs, while also considering future plans. Each entity type has its own advantages, disadvantages, tax implications, and legally required structure. Once the type of entity is selected, the owners and the company should have control agreements that memorialize the parties’ agreement on issues such as voting, governance and management, buy-sell, transfer restrictions, dividends or distributions, and taxes. An experienced startup attorney can help you determine which makes the most sense for your business and goals.

Federal, State and Local Regulations: Understanding the specific legal requirements of the state(s) and/or industry in which your business operates will also provide critical insight for future operation. This includes licensing, permitting, tax obligations, and more.

Employment Laws: Federal and state employment laws dictate how wages, employee rights, and workplace safety issues must be handled. If the organization will have employees, it is important to create and administer employment policies and procedures that comply with applicable laws, thus avoiding potential issues, penalties or litigation.

Taxation: Understanding tax obligations, including federal taxes, state taxes, sales taxes, and other local taxes, will help the business run efficiently and will likely help to reduce cost. A skilled tax attorney can help identify strategies that keep your business in compliance while maximizing tax savings.

Intellectual Property Strategy: An appropriate intellectual property strategy will provide a strong foundation for the future. This will often involve taking the proper steps to ensure that any trademark, patent, or copyright filings are completed, while also developing systems and policies to protect inventions, technology, and trade secrets.

Contracts and Agreements: Running a business often involves working with others. Before entering into any contracts or agreements, ensure that they satisfy all applicable laws and are designed to protect your company’s interests.

Real Estate and Zoning Laws: If your company plans to lease or purchase property, a thorough understanding of local real estate and zoning laws will be essential. If the business is involved in any type of real estate development, an understanding of construction and financing rules and regulations will also be necessary.

Larkin Hoffman’s Startups and Emerging Businesses Practice Group is uniquely situated to help guide founders and entrepreneurs through the legal challenges of business formation and development in an efficient and cost effective way. Contact us for more information.