Partnering with a Legal Firm: When and Why
Startup founders have a long list of decisions to make, and the stakes of each decision can sometimes seem painfully high. If you’re in the driver’s seat of a new company, it can often seem like the entire future of the business hinges on your next big decision, and making the right move or the wrong one can affect the lives of everyone from vendors to investors to the employees who count on you.
When it’s time to get legal help with some of these decisions, that—in itself—can feel like a gamble. Legal teams can help you understand the pros and cons and give you the lay of the landscape. They can make recommendations based on a deep wealth of experience and a broad view of the marketplace. And they can explain exactly what you stand to gain or lose by steering left or right. But this service comes at a cost, and some founders are tempted to protect their resources by making these decisions on their own and accepting the consequences for better or worse.
There are some occasions when it’s smart to act alone, and other occasions when the cost and risk of an unguided decision may simply be too high. When it comes to the issues below, stay safe and on track by checking in with your legal team.
Founder agreements that apply in the event of success or failure
Determine how your team will divide up assets and part ways if a split becomes necessary. If unresolvable disagreements arise or the team breaks down for any reason, a legal team can help you move through the rift with minimal damage to the company or your own financial state. The same applies to growth or unexpected swerves in a positive direction.
Taxes and accounting
State and federal tax obligations can be complex, and they may vary widely depending on the type of corporate structure you adopt for your company. Your team will need to stay in line with accounting laws while establishing a bookkeeping and payroll system, and you may need help navigating sales tax rules in multiple jurisdictions. If you have current or future clients within the European Union, you’ll be responsible for the new EU VAT tax, which is based on the customer’s location instead of the seller’s. You may also be entitled to a variety of tax credits and incentives based on what you sell and how you run your business, and a legal team can help you understand and access them.
Hiring and staffing
Hiring and staffing come with a long list of requirements and regulations that you’ll need to comply with from the start—even if you’re only hiring one person.
Protecting customer data
Data security is becoming increasingly critical to small companies on the path to success, and your obligations don’t just stop at protecting customer payment information. To attract large clients and serious investors, you’ll have to jump through hoops and provide multiple forms of proof that your data infrastructure is scalable and strong.
Protecting intellectual property
Service-based business models don’t usually depend on physical assets (like machines) as much as profitable, revenue generating ideas. Business strategies, product designs, delivery models, code, written documents, logos and trademarks, and even recipes can take the company with them if they walk out the door. Protect your intangible assets by contacting a legal team and drafting template agreements for employees and clients.