4 Step Legal Checklist for New York Startup Entrepreneurs
Congratulations! You’ve thought up that million-dollar idea and you are ready to crush it. It’s time to move from that great idea to launching that great business to make it happen. Now is the time to lay down a stable business foundation so you can grow your company and protect all of your hard work.
How do you make investors comfortable and willing to provide you with capital?
How do you protect your innovative branding and work product that comprise the heart of your unique business?
How do you go about protecting yourself as you start working with others?
To effectively move from being a superstar technician to a business leader you need to work on your business as much as in it. The following list provides you with some of the crucial legal areas that you need to consider to make your business stable, scalable and ultimately transferable so one day you can be sipping umbrella drinks in paradise. Aloha!!!
1. Business Formation
Choosing the right business organization to meet your specific goals is imperative. Your choices are many and include:
• sole proprietorship,
• limited partnerships,
• limited liability companies and several variations of each type.
Your decision will be a balancing act where you must prioritize many factors including:
• Start up costs,
• Control by owner,
• Tax considerations,
• Personal liability,
• Lack of Continuity,
• Ability to raise capital, and
• Legal regulations.
The important takeaway here is to have a well thought out business plan and roadmap. Your vision for the future of your business will make choosing the right business organization easier and you will save the time, expense and effort of having to make changes later.
2. Intellectual Property: Patents, Trademarks, Copyright, Trade Secrets
If yours is like most new businesses in this information age, the main property that creates the value in your company is your intellectual property. Protecting your intellectual property means securing your:
• Inventions and innovations through Patents,
• Branding and reputation through Trademarks,
• Creative expressions and original content with Copyrights, and
• Proprietary and confidential information comprising your Trade Secrets.
An important takeaway here is that it is not enough to simply register or claim ownership to intellectual property. In most instances, the owners of intellectual property are required to monitor and proactively enforce their rights or risk losing them.
3. Registration, Regulation and Compliance
Starting any business requires entry into a business community with varying degrees of governmental oversight and control. Some of the requirements for your startup include:
• Forming your company existence with the state,
• Setting up your company as a taxpayer with the IRS,
• Setting up your company to collect state sales tax,
• Securing necessary licenses based on your business type,
• Complying with industry-specific regulations and
• Procuring necessary business insurance policies like workers comp.
All of the rules and regulations promulgated to enforce these laws provide heavy penalties and consequences for non-compliance. Make sure to err on the side of caution so you protect yourself from a future business catastrophe. Nothing is comfortable when you are wearing vertically striped pajamas.
4. Securing the relationships with the people that work for and with you.
I say with confidence that there are virtually no successful businesses where one person can do it all alone. Even the eccentric novelist toiling away on her hunt and peck typewriter from the 50s needs a team of agents, promoters, lawyers and publishers to bring her brilliance to the masses.
Defining relationships with reasonable contracts is crucial to defining expectations from the beginning and easing the potential difficulties unwinding down the road. After all, growth comes with change and managing that change can often make the difference between success and failure.
Agreements are important with:
• Independent Contractors
• Strategic Partners
• Public Relations
• Service Providers
Taking the time to solidify your arrangements and business relationships in writing up front will save you time, money and heartache in the future.
Of course, I understand that these four steps all make common sense. The question you must ask yourself is “do I make common sense, my common practice?”
Hiring the right attorney to guide you through your startup is well worth the investment. Take a moment to look at what you’ve done to build the foundation of your business. Are you where you need to be?