Essential Business Law Tips to Keep in Mind before a Startup Launch

As it is launching a startup has enough complications with regard to technology, finance, human resources, etc., and when you add the legal complications, it can get pretty daunting even for the bravest. Unless carefully negotiated through, the business may encounter legal problems operating in the community and with getting and maintaining its customer base. Not only there could be issues in generating a customer base, but also in getting physical space for the retail stores, the manufacturing operations, the inventory management, as well as compliance with various local zoning rules and hiring employees.
Since typically the owners of startups tend to be technocrats who are very well versed in the technical aspects of the product or service, but completely ignorant about legal compliances, it is always advisable to obtain the services of an experienced business lawyer to ensure that all decisions taken are double checked, and legally actionable. While this is an ongoing process, conducting such a check before the business starts operating for the first time is essential; otherwise, there could be the risk of the business being asked to shut down immediately due to some legal violation of the others. Some practical tips from seasoned business lawyers for entrepreneurs.

Business Law Tips to Keep in Mind before a Startup Launch

Do Not Rush Into Launching the Startup

Even though you may have a business idea that is brilliant and your studies have revealed that there is a lot of potential in the market, it does not pay to rush into establishing the business without first considering the various compliance and liability issues. It is the failure to recognize these concerns in time, which is responsible for the very high rate of failure of startups in the first year of existence. Invariably, the reason quoted by entrepreneurs that they had rushed into the situation without giving enough time and thought to these aspects.

Make Sure That the Contracts Are Watertight

Usually, a startup will have a number of co-founders or partners, each of whom may be responsible for bringing to the table certain skills and experience. At the time of inception, nobody usually stops to think about a situation where there could be disputes among the partners regarding the way the business is run but since typically entrepreneurs tend to be of a high temperament, the chances of disagreement remain very high and can prove to be completely disruptive to the smooth running of the business. You need to ensure that there are watertight contracts in place so that in the case of any disputes the contracts can be enforced and all the partners get a fair deal. The subjects that the contracts will normally include our intellectual property rights, the equity, and profits of the business as well as its assets and liabilities. All the documentation will need to be reviewed by competent business attorneys to ensure that all issues have been addressed.

HitchesInvolving Former Employment

Many startups are established by entrepreneurs who are dissatisfied in their employment and leave to pursue their dreams. However, if the business concept or any particular product idea had been thought of during the earlier employment, it could potentially be a challenge to the new business if the former company contests it. The founder of the startup may also be subject to a non-compete or non-disclosure agreement that he may have executed with his former employer. It needs to be clearly proven that the new business is not utilizing the trade secrets, the list of customers or any other confidential knowledge.

Ensure Completion of Legal Documentation Concerning Company Formation

For any company to start operating it must get a number of permissions and clearances. To make this possible, the company has to prepare and file documents such as memorandum and articles of incorporation, stock purchase agreements, non-disclosure agreements, and similar documents to the relevant authorities. These are extremely important documents and the contents need to be carefully vetted by an experienced corporate lawyer to ensure that the contents are legally valid.


Typically the nature of startups means that these companies start off with nothing apart from the vision of one or more people. To ensure that all documents are prepared in such a way that the operating clearances can be obtained at the earliest and that the interests of the owners of the business are protected at all times, it is essential that the services of a good lawyer specializing in business law should be taken.

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