5 Ways Business Lawyers Help Startups

Startups in San Diego should reach out to the business lawyers at Gehres Law Group to help get their company off to a solid start as they begin operations. Only around 1/3 of new businesses that open up will make it past their 10th anniversary, according to The Motley Fool, but your business can maximize the chances of becoming one of them by making the right choices from day one. 

Business lawyers can help new companies in many different ways to protect their competitive advantage, to minimize risk and to develop a plan for the future. Attorneys also assist those who are starting companies in finding ways to protect their personal wealth from losses if something goes wrong with the business.

Gehres Law Group will tailor the services our firm provides to your new company’s needs. To give you an idea of what business lawyers do, consider five of the most common services business law attorneys provide to startups.

Choosing the Right Business Entity

Many new business owners run their business as a sole proprietorship or partnership either by default (because they fail to choose another business structure) or because they don’t have a full understanding of other options. Unfortunately, both sole proprietors and partners face significant personal risk of liability because the proprietor or partner is viewed as the same legal entity as the company. A judgement against the business, lawsuits and business bankruptcy can put personal wealth in jeopardy.

Other business structures including Limited Liability Companies, Limited Partnerships, S-corporations and C-corporations provide liability protection and, in many cases, also offer enhanced tax flexibility and other benefits. For example, if you form an S-corporation, you can choose to characterize some of your income from your business as a distribution rather than wage income, allowing you to avoid paying FICA taxes on that income. This is legal and allowable, as long as you pay yourself a reasonable compensation for services rendered to the business.

Being Smart About Contracts You Sign

Startups may have to sign contracts with investors; with suppliers; with a landlord they are leasing from; and with a host of other individuals and business entities. Disadvantageous contracts could make it difficult or impossible to achieve business success. In fact, many businesses have declared bankruptcy under Chapter 11 because their companies needed to re-negotiate contracts that were making profitability impossible. By negotiating contracts to protect business interests, and having contracts reviewed by an attorney to ensure they contain appropriate protective clauses, you can reduce the likelihood that an agreement adverse to your interests will render your company unprofitable.

Hiring Employees While Protecting Your Organization

Many startups must hire employees to help their companies operate and grow. Hiring employees unfortunately makes your business vulnerable to wrongful termination lawsuits, unemployment claims, workers’ compensation claims, and OSHA citations if a worker gets hurt on-the-job. Employees could also potentially share trade secrets, go to work for competitors, or steal clients and go into direct competition with your business.

California has some of the strictest anti-discrimination laws in the country under the state’s Fair Employmnt and Housing Act. Califronia also has more stringent worker protection laws than many other states, including laws such as the California Family Rights Act, which requires employers who have 50 or more employees to provide job-protected leave upon the birth or adoption of a child or if the employee or a family member develops a serious health condition.

There are options to protect yourself from the risks that employees present. Non-disclosure agreements are one way to protect secrets. Knowing the laws on workplace safety and discrimination will also help your company avoid inadvertent and costly mistakes.

Reviewing Financing Options

You may be taking out a loan or seeking investors or partners. There are pros and cons to each option. Loans put all the risk on you – but you get the possibility of all the rewards.

As one entrepeneur explained in Forbes, making the decision to raise outside capital is difficult, but company growth was limited due to insufficient funding so ultimately it was better for his business to accept outside funding in order to accelerate development.

While each business owner must weigh trade-offs of funding options independently, it is critical to understand the terms of financing or investment agreements in order to make informed choices regarding the best approach to securing funding for startups.

Protecting Your Intellectual Property

Your company may have a unique process to get work done, a creative design the company wants to sell, and a brand identity you are trying to cultivate. You want your logos, work processes and creative ideas to actually belong to your organization. Intangible property has value – often a significant one – and you need to find a way to protect your intellectual property.

Patents, trademarks and copyrights can protect logos, inventions, processes, creative product, and your company’s brand identity. Obtaining intellectual property protection will require submitting applications to the US Patent & Trademark Office or the U.S. Copyright Office. You will be eligible for protection only if your ideas are original ones and you can prove you meet the relevant criteria. If you wish to obtain a patent, for example, your invention must meet certain requirements: it must be new, useful, and non-obvious..

Getting Help from San Diego Business Lawyers

Whether your company is a startup or is an established business in San Diego or surrounding areas, business lawyers at Gehres Law Group can provide you with personalized legal advice to protect the business and to protect your investment within it. To find out more about how our firm can help you, give us a call at 858-964-2314 or contact us online today.

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