Four Considerations for Starting Your Business

Entrepreneurs are one of the most rewarding type of clients we work with. The passion, optimism, and drive they bring to the table is inspiring. But these characteristics can also eclipse laying a solid foundation for their business. If you’re thinking about launching a business or going freelance, here are four areas to focus on:

Business Formation: Should I form a corporation, limited liability company or something else?

There are numerous considerations that go into selecting the right business entity for your startup. These include tax issues, relationships with business partners, attracting the best employees by making available stock options, and raising capital for your business. These and other issues should be discussed with experienced legal counsel and financial professionals. For example, our law firm routinely “tag-teams” the legal issues with trusted financial professionals like Donny Madhaven. We find that taking this holistic approach is much more beneficial for the entrepreneur in both the short and long-term.

Employees or business partners: Do I have the right agreements to grow and protect the business?

In our experience, the area that generates the most lawsuits has to do with disputes between business partners and employees. Sometimes these are honest disputes that arise from misunderstandings as to terms for the business relationship. Often times individuals become dissatisfied with the start up and leave to start a competing business. Without the proper agreements, such departures may jeopardize your startup, it’s intellectual property, and customer relationships. Without having clear and proper documentation, these disputes often become “messy” and expensive as both sides fight for their version of the agreement to be enforced.

Getting paid: Are my customer contracts clear and will they be a useful tool if my business is not paid for its work?

Similar to agreements with business partners and employees, and is also important to have in place customer contracts that will both facilitate business, as well as ensuring you are compensated for your services. This starts with having the right contract language in place. Entrepreneurs will also likely want a defined process to handle changes in the scope of services once a contract is entered into. Again, without proper contractual language, disputes become messy and expensive.

Website, Social Media, and E-commerce: Does the digital side of the business equation add up to success?

Conducting business online or through social media requires compliance with a patchwork of state and federal regulations. Failing to understand these legal issues may lead to inadvertent regulatory violations costing your business fines. Also, and an area we frequently collaborate with business owners on, is responding to negative reviews that unlawfully defame your business. You work hard to establish a stellar business reputation. And a significant frustration for any business owner is to have that reputation unfairly attacked by a disgruntled customer. But lashing out may not be the best response. In our experience, we have used a variety of approaches to resolve reputational attacks. If negotiations fail, we have successfully pursued litigation or taken other steps to mitigate the negative reviews.

As someone who left the security and comforts (and oh so wonderful huge paycheck) of a large national law firm to start his own business, I can relate to the excitement and optimism associated with opening up your own shop. But it is important to make sure you have a framework for building your new business. While there are many issues to consider, before topics discussed in this blog post are some of the most important.

This blog post was inspired, in part, by the folks over at Moo (the business card and so much more people). Their blog offered four smart “self-care” habits for entrepreneurs to personally focus on and is worth checking out (Self-care and the start-up). Also, as prior customers of Moo, their services and work-product are top-shelf. We say this as a repeat satisfied customer (and we aren’t even getting any compensation or kick-back whatsoever for our praise).

For more start-up legal information for starting a business, especially e-commerce legal compliance and best practices, contact Jason Shinn. He began his legal career working at a national law firm where he handled business and employment law issues. Around 2011, he opened up his own law firm to work with start ups and established businesses in the areas of employment, contract, and Internet law, as well as addressing merger and acquisition issues.