Don’t Let Your Startup Become a Start Over

October 12, 2020

There were almost 31 million small businesses in the United States in 2019. Entrepreneurs know that starting a business is full of difficult decisions, such as assessing the need for legal counsel. Startups can fear getting attorneys involved because attorneys look to minimize risk, and start to be looked at as the “no-person.” Startups worry this stifles their creative innovation. However, many issues they deal with will be preemptively resolved by a good attorney. Corporate counsel assists with government regulations, stocks and securities obstacles and intellectual property confusion. The right lawyer can mean the difference between breaking new barriers or breaking the law.

Business Formation

Starting a business means you need to decide what sort of business you want to run. It can seem tough when there are so many options that all seem similar, such as corporation, LLC, LP, LLP, General Partnerships, joint ventures and non-profit organizations. This decision depends on your business’s goals, needs and industry specific factors. Choosing the right business will provide the best liability protection and assist from a tax planning perspective.

Intellectual Property

If your business offers a product, service or technology that is unique and generally unmatched by other businesses, getting intellectual property protection is crucial. Cutting corners in the beginning could allow third parties to infringe on your intellectual property, with no legal repercussions. Investors want founders to ensure that intellectual property is protected to ensure growth of this new company. Intellectual property considerations include trademarks, patents, copyrights, service marks, trade secrets, confidentiality and assignment agreements for employees, and confidentiality agreements. Intellectual property protection may well be the foundation that determines the success of your new venture.

Best Contract Practices

Especially when dealing with clients, it is imperative to have standard form contracts for your business. Contracts can be tweaked and revised to favor one side or the other, so having a solid base draft as foundation is imperative. A good working relationship with legal counsel who takes the time to learn your business helps ensure that your contract is of the best potential quality and tailored to your needs. You can get insight on what your standard form contract should look like with research on the industry standards and a review of competitors form contracts.

Tax Planning

Establishing your business structure helps decipher what your taxes will look like as a business and how you need to prepare for tax day. The worst time to assess your company’s tax needs is when you’ve already been transacting business for a year and your tax bill is due. Having counsel on top of important tax issues can save your startup from unnecessary stress, complications and surprise bills. You must assess your liabilities for sales tax, payroll tax, stock option issues and more. Taxes are an inevitable and necessary part of operating a business, and burying your head in the sand until the last minute cripples startups every year. Legal counsel can help you understand and prepare for these complex issues.

Outsourced Counsel Benefits

Initially, the real benefit of outsourced general counsel for startups is flexibility and cost effectiveness. Whether you need help sporadically or you need consistent support to efficiently drive deals to completion, you should know:

  • A seasoned team of lawyers who have worked with companies like yours will bring invaluable knowledge and experience to the table
  • An external legal team working closely with your internal HR department will help with hiring and employment law issues that could have led to future issues
  • An experienced legal team will make your company more efficient while keeping costs down
  • Outsourcing legal work instead of hiring an in-house lawyer comes with zero overhead expense
  • You’ll have assistance with complex commercial transactions such as licensing agreements, white label agreements, strategic partnerships and SaaS Agreements when you need them to run smoothly
  • Legal counsel can support your company at the end of the quarter or the month when you have excess contract negotiations or other legal matters above and beyond your team’s typical workload
  • Counsel also advises you along the way to help ensure your business is protected preemptively


For more information on startups or any questions related to this article, contact Scott Norcross (san@kjk.com / 216.736.7264) or Paige Rabatin (pmr@kjk.com / 216.736.7270).


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