So you want to be an entrepreneur and you’ve done the “fun” stuff: you have a name picked out, you know your product or service inside and out, but now you are stuck. You have no idea how to register your company, write contracts, or pay taxes.Navigating the legal lay of the land is an important early step for any entrepreneur. There are too many legal ins and outs to go over in this article, but we can offer some tips to help you get started.
1) Seek Legal Advice Early: You can avoid a lot of problems later by consulting a legal expert before you even start operating. Don’t be afraid to ask for clarifications on confusing or highly technical terms; lawyers are trained to help you with this and foresee any issues that could be relevant to the future of your company. Some things that might come up in preliminary discussions include: finding a name for your company that will not pose any legal issues, registering your company as the correct legal entity to save you money on taxes, and making sure you have a clear deal with any co-founders. Start early, and you can save a lot of time and money.
2) Find a Lawyer with the Right Expertise for Your Industry: Although it can be tempting to turn to friends or family lawyers, it is important to consider whether they are fully equipped to handle issues relevant to your business. Whomever you choose should have relevant, specialized legal expertise in your industry. Hiring a lawyer who has worked with startups before is a definite plus. If you are unsure of how to find someone, get recommendations from other entrepreneurs in your industry.
3) Be Organized: Keep good records, such as important emails, documents, contracts, licenses, and sales records.
4) Don’t Let Legal Requirements Scare You Away from Entrepreneurship!: It may seem overwhelming at first as an entrepreneur wades into unfamiliar legal requirements. Though there are a lot of issues to keep in mind, having a good lawyer by your side can help you get through them with ease. You have already taken the courageous step to start your own business, don’t let a little paperwork take your eyes away from your vision.
In late May, 1MC held a community mapping session focused on law and what entrepreneurs and business startups in our region say they need early-on when it comes to legal services. The mapping session ended with the following takeaways for our community to consider:
Startups primarily need help in three areas—
1) What form their business should take: C-Corp, S-Corp, LLC, Sole Proprietorship.
2) Obtaining a Federal Tax ID.
3) Negotiating lease terms.
Participants found that business owners may not review contracts as carefully as they should—
1) Look for “Hold Harmless” clauses.
2) Understand where and how any disputes will be resolved.
Places to go early on for legal help—
1) SBDC Legal Corps
Founded by the Kauffman Foundation, 1Million Cups is based on the notion that entrepreneurs network and discover solutions over a million cups of coffee.
Join 1MC Mankato each Wednesday at 8:30 a.m. on Zoom: (a link each week is posted at facebook.com/1mcmankato/.) 1MC Mankato is organized by a team of volunteers and is facilitated by the Minnesota State University, Mankato College of Business Center for Innovation & Entrepreneurship.