There are a number of issues that an entrepreneur must discuss with a lawyer before starting a business which range from the legal type of the new entity to the associated risks of the new venture. Most owners do not undertake such an activity as they are unaware about its importance for the smooth functioning of their enterprise. Lawyers can provide valuable advice about on every important aspect of beginning a new company and a few of them are being presented here.
1. Ideal Structure Of The New Enterprise
A legal professional can give counsel on the most suitable structure for the new enterprise that can help in establishing the ownership of the new venture as well as in the running of its operations. Choosing the correct legal type is also essential as the tax requirements of the company will also be guided by the decision. A lawyer can explain the advantages and drawbacks of all applicable formats that will make it easy for the owner to decide the most suitable one.
2. Selection Of A Unique Name
In order to make a brand stand out from its competitors in the market, it is essential to select a name that is in synchronization with the marketing strategy and is unique at the same time. Every legal jurisdiction under which a new company is registered has rules for the purpose and engaging a lawyer will be beneficial as the professional can provide guidance throughout the process and help in completing it.
3. Advice On Appropriate Financing Options
One of the most important points that owners usually ignore to discuss with a lawyer before starting a business is the most appropriate method of financing the new venture. A legal professional can explain the technicalities of each method and also help in deciding on the structuring of the debt which is essential as it will dictate the amount of control an investor can exercise in the company.
4. Protection Of Investors’ Interests
The business may require support of outside investors right in the beginning or in the future and it is vital to discuss with a legal advisor about the benefits of the chosen structure with respect to investors’ interests. A person or entity will feel confident of entering into a financial arrangement with a company with a structure that outlines their ownership specifically as well as shields their interests.
5. Importance Of Intellectual Property Protection
Technological innovation or an original idea may lead to formation of a new enterprise and this makes the protection of this intangible resource which is termed as Intellectual Property (IP) compulsory for the secure future of the company. Many startup legal services have facilities for giving advice and helping in securing patents, trademarks or copyrights which are helpful in protecting the intangible assets.
6. Compliance Requirements Of The New Venture
A very significant issue that requires compulsory legal advice is the compliance requirements of the new venture, some of which depend upon the type of industry to which the company belongs. Regulations related to the manufacture of a product, provision of service and employment and other issues govern the functioning of any business and a lawyer is the best person to list out the registrations and licenses that are applicable to a particular firm.
7. Potential Risks As An Employer
An employer has certain responsibilities towards the workforce and there are various laws in every jurisdiction which outline these liabilities. In order to prevent any legal issues in future, companies not only must adhere to every law like minimum wages and safety regulations, but also frame policies, guidelines and foolproof employee contracts in consultation with a lawyer having experience in the matter.
8. Drafting Of Watertight Contracts
Starting a business involves entering into agreements with various parties like vendors, suppliers, clients and other entities which requires framing of documents formalizing the arrangement. An attorney can provide invaluable advice on the nature and composition of these contracts which protect the interests of the owner. They can also help by providing drafts for specific agreements or prepare a template that can be used most common situations.
9. Suggestions On Insurance Coverage
A competent legal professional can also give suggestions about the suitable insurance coverage that a company requires. Apart from protection from common issues like natural hazards, there are policies aimed at giving an entity protection in case of workplace injuries, data breaches, product liability etc. It will be easy to identify the ones that may be needed by the enterprise on the basis of a lawyer’s advice.
10. Guidance On Tax Issues
Approaching a tax lawyer before beginning a company will be helpful in understanding the issues related to matters of taxation that will be directly or indirectly affecting the business. They can provide guidance on not only existing laws but any potential legislation that can impact the venture besides representing the company in a legal forum as and when the need arises.
A lot of owners do not feel that it is necessary to discuss with a lawyer before starting a business and the above mentioned points will help in changing their mindset by illustrating to them the importance of the process.
George Dille is a professional business expert working with BusinessVenturesIndia Ltd, provides registration of a private limited company in a convenient manner.In this blog post, he’s exploring the 10 Points to Discuss with a Lawyer Before Starting a Business.Follow Amy on twitter.