Having an idea for a new business is just the first step in starting your own company. Startups have many legal issues to consider before selling their first product or service. A South Carolina business attorney helps entrepreneurs turn their ideas into companies. Below are a few of the legal issues that every start-up faces.
Legal Issues and Start-ups – What Do You Need to Know Before You Begin Business?
Failing to Have a Founder’s Agreement
Many new start-ups are the result of the ideas and contributions of multiple individuals. A detailed Founder’s Agreement can avoid common legal issues regarding ownership, responsibilities, and duties among a group of individuals. It also dictates how an interest in the start-up or equity in the start-up may be dissolved, sold, or transferred.
Business Entity and Structure
If you do not do anything to create a formal legal entity, state laws recognize your company as a sole proprietor in South Carolina. If you have a partner, state law treats your company as a partnership. However, it might not be in your best interest to operate under these default business entities. Sole proprietors are personally liable for all business debts and obligations. The same is true for partnerships created under state law.
You must give careful consideration to the type of legal entity you choose for your company. The legal entity you choose for your company impacts your personal liability, taxes, management structure, financing options, and daily operations.
Protecting Intellectual Property
Failing to apply for patents, trademarks, and copyrights could result in your ideas being stolen by competitors. Protecting your trade secrets is also another important step in protecting your business from being stolen from you. Creating detailed nondisclosure agreements and confidentiality agreements are as essential as applying for patents and trademarks.
Licenses and Permits
Depending on the type of business you create, you may need one or more licenses and permits, especially if you intend to operate a brick and mortar shop. Compliance regulations for some industries are rigorous. Failing to comply with regulations can result in serious legal issues for your start-up.
Using Generic Contracts, Policies, and Agreements
It may be tempting for a start-up to use generic forms found online to save money. However, generic agreements, contracts, website policies, privacy policies, employment agreements, and other documents can create legal liability for the start-up and the owners. Generic forms do not contain the detailed information needed to protect the company and the owners because they are not customized for the company to cover specific state and federal laws applicable to the business.
Failing to Protect Customer Data
The protection of customer data is a huge legal issue that many start-ups fail to give adequate consideration. If a start-up collects any data from customers or clients, including anyone visiting their website, the company is legally obligated to protect that data. Many federal and state laws in the United States cover privacy of data and information. Also, a start-up that offers services or products overseas must be aware of international privacy laws, such as the General Data Protection Regulation (GDPR) for the European Union.
Contact a South Carolina Business Attorney for Help
The above legal issues are just some of the things you must consider when starting a business. Many other legal issues may apply, depending on the type of business you create.
However, you do not need to try to tackle the legal issues a start-up faces alone. Contact Willcox, Buyck & Williams, PA to discuss this important legal checkup in greater detail. Our South Carolina business attorneys can help you ensure that all legal matters are addressed correctly. We help you protect yourself, your ideas, and your company.