Alert: Top Five Take-Aways For Companies To "Startup Strong"
On November 7, 2018, Patrick Murphy presented Starting Up Strong, an overview of common questions that clients starting businesses face and helpful answers on topics including entity formation, protecting intellectual property, hiring employees and contractors and raising capital, to a group of attendees at a collaborative workspace location of WeWork in Philadelphia.
Below are the top five takeaways from the presentation.
- Take Care of the Formalities. Whether you form an LLC, a limited partnership or a corporation is a discussion among you, your accountant and your attorney. Whatever form you eventually pick, it is important that you get an entity in place as soon as possible so you can avoid potentially unlimited personal liability based on the operation of your business. There are several factors that go into the type of entity you decide to use such as whether you will seek angel or venture capital funding, how you expect the entity to be managed, where the business operates, your tax situation, how you intend to distribute profits and whether you intend to grant employees equity incentives. It all ultimately depends on the goals you have for your company and yourself; however, it is important to think about these factors early because changing entity forms later can be costly and time-consuming.
- Develop a Comprehensive Intellectual Property Strategy. Ensure that you can protect company names, brand names, logos, domain names and other relevant intellectual property in the early stages of company development. You don’t want to have your heart set on (or invest a lot of money developing) a great company name or product name then find out you can’t use it. Take steps early on to protect your company’s right to use your intellectual property and prevent others from using it. Develop a list of jurisdictions where your company operates and may operate so you can make appropriate filings and even take proactive steps to file in jurisdictions where you aren’t yet operating. Protecting your intellectual property is not always as expensive as everyone expects. Some of the protective steps you can take are easy and inexpensive and can save you from a lot of future headaches.
- Grow the Team You Need to Succeed. Determine who you need to make the business prosper. Will you hire them as employees or engage them as independent contractors? This decision can open a can of worms with respect to intellectual property, governmental regulations, compensation, paid leave and insurance requirements. Be careful about bringing on interns because there are strict qualifications for interns with respect to work hours and compensation. Take steps to ensure that intellectual property developed by employees, independent contractors and interns becomes the property of your company. Consider whether requiring employees and contractors sign non-compete or non-solicit agreements is appropriate for your business.
- Pay Attention to the Securities Laws. A lot of companies forget to pay attention to federal and state securities laws especially when raising money from investors or issuing equity to employees. The securities laws apply whether you know about them or not and whether you’re raising money from friends and family or venture capital. Be careful who you ask for money and be sure to know your investors.
- Get in a Pattern for the Day-to-Day Stuff. What needs to be in writing? EVERYTHING. If someone is paying you money to do something or you are paying someone money to do something, get it in writing. Don’t rely on everyone to have perfect memory (or integrity). Don’t be afraid to negotiate; it never hurts to ask. Asking to make a change to an agreement shows that you’re paying attention and that you understand your business. Plus those negotiating skills you develop will come in handy as your company grows. If a problem arises, don’t ignore it. It’s more cost-effective to talk to a lawyer when a problem first arises rather than after it snowballs.
Developing a comprehensive strategy for your company at its earliest stages is an important step to ensure success and future growth. Reach out to Patrick Murphy at 215.569.4299 or firstname.lastname@example.org if you are interested in learning more about starting up strong.
The information above is provided for informational purposes only and not for the purpose of providing legal advice.