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While starting a startup may be a lucrative idea, not having legal guidance may set you up for failure. A study recently found out that 21.5 percent of startups don’t make it to the first year and 30 percent to the second year. The common reasons for failure include bad partnerships, lack of research, and money running out.
After coming up with an excellent idea for a startup, seek legal advice to guide you all the way. The lawyer will help you manage your relationship with investors and draft employment agreements. They will also help you avoid costly lawsuits and incompliance with the law.
Hiring and working with legal counsel may be daunting and confusing if it’s your first time. You need someone responsive, competent, and easy to work with. Once you sign a retainer with them, here are seven benefits your startup will derive from their legal services.
1. Help Your Startup Find the Right Business Structure
It isn’t easy to navigate the ins and outs of business structures when starting a startup. With a business formation lawyer by your side, you can decide the suitable options for your business. The attorney will help you understand how C corporations, S corporations, and LLCs differ from each other.
The lawyer will help you decide the type of ownership structure that suits your startup. They’ll advise you depending on your financing options, the number of owners, and the type of business you want to run.
While it may be tempting to make this decision on your own, you wouldn’t understand the legal liabilities of each ownership structure. You may also risk losing your company to other shareholders since you didn’t involve legal counsel when forming it.
2. Connect You to Investors and Manage Relationships with Them
It’s no secret that lawyers work with lots of people from different lines of work. Your lawyer may be in a position to link you to investors that share your vision. They can also help reduce business risks by advising you on the benefits of involving investors.
A reputable business lawyer can connect you with venture capital sources and angel investors. They’ll ensure that your startup kicks off from a strong start with a high valuation and good funding.
You may rely on legal counsel to manage your relationship with different types of investors. They’ll assess whether your investor partnerships are beneficial. With their help, you’ll get to know whether you’re giving away too much power to the investors or signing the right agreements.
3. Draft Business Contracts and Negotiate Leases
You need a lawyer when managing relationships with employees, customers, or business partners. The lawyer will draft contracts on your behalf and review any existing contracts for omissions or mistakes.
On top of this, hiring a lawyer will help you determine instances in which contracts are helpful. With their help, you get to manage your business relationship without breaching any contracts or agreements.
You may count on a lawyer’s expertise when receiving and negotiating real estate agreements and leases. Involve them when renting any property for your startup to get a fair deal on the lease.
4. Set up Your Insurance Properly
Starting a business comes with plenty of insurance liabilities. You have to obtain proper insurance coverage as the business owner.
The insurance policy will cover any physical products you sell and employee claims, disputes, or incidents. It will also cover slip-and-fall accidents endured by customers who visit your physical store or employees working on site.
Getting a one-size-fits-all plan to cover these insurance needs can be pretty tricky. It will take you time to review the terms and conditions that each cover brings. Count on a startup lawyer’s advice to choose the right insurance plans for your new business.
5. Protect Your Startup’s Intellectual Property
You need a lawyer to secure the rights of a product that’s unique and new to the market. The legal counsel will help you copyright, patent, or trademark your ideas to avoid infringement.
Hiring an attorney will help your startup solve any copyright infringement cases brought to your attention. You can count on them to issue DMCA take-down letters to individuals that try to steal or use your idea. They’ll help you navigate litigation related to copyright cases at ease.
6. Advice You on Employee Handling
Your startup business may face legal issues when hiring new employees. You need a startup lawyer to help you get an Employer Identification Number from the IRS. The legal counsel will also give you grounds to run background checks on the candidates to avoid invading their privacy.
Count on a lawyer’s help when drafting employee contracts that state the employment terms and conditions. These contracts help prevent incidents or disputes between your startup and workers.
A lawyer will help you understand the legal differences between an independent contractor and an employee. Failing to classify your workers may land you in legal trouble with the IRS.
7. Help You Pay Your Taxes and File Returns
You’ll have to pay taxes to the federal, state, and local authorities once your startup starts earning revenue. The IRS will impose huge fines on your business if you fail to pay tax on time or for post-filing issues. You also risk losing your startup revenue if your business is on the IRS’s watchlist.
A tax attorney can help arrange your startup finances to optimize your tax situations. They’ll also help your business to abide by the tax rules and settle disputes you have with tax authorities.
As your startup progresses, you’ll need the attorney to challenge any IRS assessments and audits and help you resolve tax debts. They will also act as your advocate when facing any tax-related legal issues.
Hire a Lawyer When Starting a Startup
Hiring a lawyer when starting a startup ensures that your business stays on the right side of the law. Get an attorney who understands the best business practice and your local laws to enjoy these benefits.
Find legal help when getting your business started and handling contingency plans from Venerable Law. We also offer ongoing advice and oversight and litigation to help your business stay protected in the long term. Book a legal appointment with us today for your startup.
