Legal Problems Your Start-up Should Avoid

Starting a new business is an exciting endeavor.  It can also be a daunting task, with many considerations to factor. Too often, businesses are left vulnerable to potential problems from lack of comprehensive planning in the earliest stages of development. Moving forward with advice from a seasoned Columbia, Maryland business attorney is a smart approach to building your business. Together with good counsel, you will be able to frame your start-up and avoid these common legal problems. 

Failing to Choose the Correct Legal Entity

Defining the legal entity of your business is critical to preserving various protections for you and your business. Each legal entity offers its own tax and legal advantages and risks. Advice from a qualified business attorney will highlight which legal form will best serve you and your business. Failing to choose the correct entity for your business may personally expose you to potential punitive tax and legal actions.

Available legal entities include sole proprietorships, general partnerships, S-corporations, C-corporations, limited liability companies (LLC’s), and limited partnerships. While sole proprietorships and partnerships are most common, these structures afford little protection against legally awarded damages. 

Gain greater personal protection by organizing your business as a corporation or limited liability company. Corporations and limited liability companies are legally identified as a separate , apart from its principals and employees. Corporations and limited liability companies offer business founders the potential benefits of reduced taxation, protection of personal assets from debt collectors, and a measure of protection to board officers and employees from accountability in legal proceedings.

Not Protecting Proprietary Rights and Intellectual Property

What would happen if you failed to adequately protect your product or intellectual property? Your product or service would likely be assumed by a competitor and the value of your company in the marketplace would decline.  It is the responsibility of your company to ensure that the property rights of your product or services are protected. Four readily available protections include trademarks, copyrights, patents, and non-disclosure agreements.

Trademarks and copyrights are two of the most commonly used protections. They apply to symbols and written works, and need not be registered to be used. However, if a legal dispute occurs regarding brand identifying symbols or ownership of a written work, trademark or copyright registration would be helpful when litigating your ownership of the item(s).  Both can be registered with the US Patent and Trademark Office, and your business attorney will be able to best assist you with the process.

Another form of property protection is a patent. Patents identify ownership of a new product to the developer, and prevent others from being able to copy, make, use, or sell the patented item.  Patent protection is a long and complicated process. Enlisting the help of a patent attorney is a wise decision to navigate the process and protect your proprietary rights.

Additionally, intellectual property is often overlooked when it comes to protectionary measures, but it is simple and important to secure. Any person with access to a company’s intellectual property secrets should be presented with non-disclosure and non-compete contracts. These contracts are a deterrent to the theft, sharing, and selling of trade secrets. All associates with access to proprietary information should sign non-disclosure and non-compete clauses. These contracts should be drafted by your business attorney, be legally binding, and be signed before intellectual property is shared.

Failing to Utilize your Columbia Maryland Business Attorney - Operating on Verbal Agreements

Shuffling paperwork is rarely viewed as an exciting part of doing business, but gone are the days of the old-fashioned handshake deal. While tedious and monotonous, written agreements are an important part of best business practices. Taking the extra step with your business attorney to draft forms and contracts will potentially save you and your company from costly misunderstandings and poorly defined expectations.

Your business model should include employee contracts, non-compete and non-disclosure agreements, and service and product agreements. Using standard forms and language that is clear and decisive will provide that everyone is treated fairly and with clarity. 

Cutting Corners to Avoid Legal Fees

Many entrepreneurs are reluctant to use the services of a qualified business attorney during early business development.  In attempt to save money, they hope against the worst and expect the best.  But rarely is this an effective strategy. In fact, too many businesses wind up expending more money for legal services in reaction to a legal issue that could have been avoided. Allocating dollars toward the expert services of a Columbia, Maryland fractional general counsel is a wise strategy. Sound legal advice from the start will cost you, but it will cost less than the time and financial resources spent against potentially avoidable legal pitfalls.