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Why startups need a lawyer?
September 21, 2020

Why startups need a lawyer?

Every startups need a lawyer. Startup refers to a company in a first stage of its performance. Startups are initiated by one or more entrepreneurs who want to promote a product or service for which they believe there is a demand. Startups also have to consider where they will do business and their legal structure. Startups need to ponder what legal structure best fits their entity. A sole proprietorship is suitable for a founder who is also the main employee of a business. Partnerships are a feasible legal structure for business that consists of various people who have joint ownership and they are also fairly straightforward to inaugurate. Personal liability can be reduced by registering a startup as a limited liability company. It must be registered in company registar’s office, with every formal and legal document of the company. 

Startup is a legal entity, in simple words it has to heed by law. Here come the need of a lawyer, who will help to abide by the law. The laws that apply to startup businesses diverge based on the specifics of the situations and even business people who decide to go it alone have option to protect themselves from personal liability for business debts and obligations. For this and other most important reasons, a startup will need a lawyer. 

1. Liability:

Different business forms provide various protections and risks to the business owner/investor. Personal liability means that business puts everything own at risk. An attorney can help to avoid this situation or minimize the risk. Knowing about personal liability, and reducing the risk that business may devastate the economic well-being of you and your family, is well worth a visit to an experienced attorney. 

2. Registering, licensing and permits:

Some business entities are required to register with the state in order to be recognized. Even businesses that are not required to register may be required to obtain licenses or permits.

3. Contracts:

Most businesses execute contracts for space, services, and supplies. Businesses often have agreements between partners, investors, and employees. It is important to get it right so you don’t end up in court.

4. Strict conformity:

With some business entities you must strictly conform to the state law governing that business form, or you may lose the benefits and protections of those laws.

5. Business form:

The choice of business form (i.e. sole proprietorship, partnership, LLC, or corporation) often dictates the legal responsibilities and potential liability of those involved in leading the business, as well as the manner in which it may operate. For example, choosing the wrong entity may make you personally liable for the wrongs of employees or partners.

To understand the legal aspect as well as to deal with it, a company must have lawyer. You must make sure you hire a lawyer right at the inception of your startup drift instead of when you already face some legal trouble.

This is one matter where the expression, ‘prevention is better than cure’ rings entirely true.