Going into business for yourself can be a liberating, joyful experience. Very often, entrepreneurs are excited at the prospect of doing what they love for a living. This excitement – known as the entrepreneurial spirit – sometimes has the effect of causing entrepreneurs to fail to look before they leap.
That is where the experienced and steady hand of a business attorney comes into play. Whether it’s Cory Briggs San Diego lawyers or similarly qualified attorneys elsewhere, tech startups need to find relevant legal representation. Whereas the entrepreneur is looking forward to working on projects and getting down to business, the role of the attorney – as always – is to offer detached, professional advice that will best protect the client’s interests.
Here are five questions every aspiring tech entrepreneur should ask a lawyer before opening their doors:
1. Should I incorporate or form a limited liability company (LLC)?
Before any work is done, the entity that will be the business itself must be formed. This entails a selection of form between a corporation or an LLC. A corporation has a President, Vice President, Secretary, Treasurer, and shareholders. An LLC has members and directors. Beyond that, there are tax implications to consider, a tax identification number to be obtained and various other formation documents to be prepared and filed. This is a crucial first step and will set your business up for years if handled properly.
2. What should I consider when naming my business?
Consider a unique name that properly identifies your entity as a tech or software company. Furthermore, be aware that if the business name you select is the same as or similar to another company name, it could give rise to a copyright infringement lawsuit. Be very careful when naming your company and do all of the necessary research to ensure that the name you choose is completely unique.
3. What should I do about the startup capital I receive?
Startup capital is often the subject of dispute. If there is no written agreement in place, the investor can make a claim to your business and its assets. In order to protect yourself, you will need a clear written agreement that describes the nature, source, and intent of any capital contribution you receive. Also, all parties involved should be represented by an attorney so they cannot attempt to have the agreement set aside down the road, claiming they did not know what they were signing.
4. Do I need a business plan, articles of incorporation, or corporate mission statement?
Absolutely. Many tech startups make the mistake of simply forming a business entity and leaving these items blank. The reason being they don’t want to invest the time to write it themselves or to pay the money to an attorney to draft the agreement. This is sometimes a fatal mistake since the corporate structure and intent of the business must be in writing from day one so that all members of the entity know what to expect in terms of division of duties, compensation, and dissolution of the entity.
5. How is intellectual property (IP) protected?
Intellectual Property is protected by way of copyright, trademark or patent. Once your IP hits the public domain, it is subject to appropriation by anyone if it is not registered. Before engaging in any business, make sure that your IP is property copyrighted, trademarked or patented.
Finding a qualified lawyer in your area should be your first order of business before you open your doors. Consult with and retain an experienced attorney in your area so you can focus on your business, its long-term growth, and success.