You and your best friends have a great idea for a new business and you believe that you have the perfect market — you’ve even scraped together the funding to make your dream a reality.
While there are a lot of small steps down the golden road of success, some of those steps have to be taken more carefully than others. Here are two that no new business should neglect:
Hire an Attorney
Technically, you don’t want to hire just any attorney — you want to hire an attorney who specializes in business law.
Even among business law attorneys, however, there are some that specialize even further. The attorney or firm you need is largely dependent on the nature and complexity of your business, market, industry and product.
Try to at least find a legal firm who can handle business formation laws, contracts, employment law and intellectual property concerns.
Take note, however: Experts caution against hiring an attorney who happens to be a friend or a relative simply because he or she will give you a discounted rate — an attorney who handles mainly personal injury cases might be able to get through the basics of a business formation, but you ideally want someone who specializes in business law.
Clarify the Business Agreements
You and your buddies aren’t just friends anymore — you’re business partners. You need to have a founding agreement that spells out the nature of your business relationship. Otherwise, you are all potentially heading down the road to a lawsuit instead of toward the land of riches and rewards.
Your founding documents need to address (at minimum):
- Is the business a partnership, limited liability company or some other legal business entity?
- What title and job duties does each founding member have?
- Who is investing what money into the business?
- What share of the profits or salaries each can founder can expect?
- What happens if a founder wants to part ways?
- What happens if the rest of the founders want to oust one of the others?
This is just a general guideline that you can use to start your questions — it needs to be adapted to your particular business and needs. A business litigation firm can provide more information.
Source: www,allbusiness.com, “17 Key Lessons for Entrepreneurs Starting a Business,” Richard Harroch, accessed Aug. 24, 2017