I’m a business lawyer and have been helping companies for over 13 years. What would I do if I were just starting a new company? Below, in order of importance (and timing), I’ve outlined a nice and easy checklist so that you can start implementing your new business plan today!
Most new companies have some Intellectual Property (IP) they’re selling. Maybe it’s software, instruction materials/seminars, or maybe it’s an app. If you do have any IP, and that IP is not yet fully developed, you will need a developer contract.
Why is this important? Whoever you hire to develop your IP (write the handout content or the code, design the mobile app wireframe, create the user interface, etc.) you do not own that IP unless you have a special contract that states that you own that IP. Trust me on this one, I’ve seen too many well-intentioned entrepreneurs with great ideas get wrecked the moment they become successful because a developer uses this loophole, and makes them pay an additional mammoth cost to buy the IP that they should have owned in the first place.
There’s a lot that goes into setting up a new business that is fully in compliance with your State and Federal Laws. There are various entity types you can use (LLCs, Corporations, LLPs, S Corps, etc.) It’s usually best to setup an LLC, we’ve written about the best entity for your business in other articles.
The main reason for a new company is to get what’s called “Limited Liability.” This means that, should anything go wrong with your business, your personal finances don’t have to take the hit (it’s “limited” to your business). But, you don’t get limited liability if you don’t set up your company correctly, and that’s where business lawyers come into play.
A good business lawyer will help you to choose a solid business name, register your company with the Secretary of State’s Office, get you in touch with a CPA so that your tax filings are done correctly and on time, and, help out with partnership contracts that you’ll want to have in place (and signed) early on.
Obviously, this is inapplicable if you’re running solo. But, if you have business partners, It’s not “Show me the money!” It’s “Show me the partnership agreement!” No, seriously, I’ve seen hundreds of great business partners have breakups that kill good businesses because they failed to write a good partnership before the business made money. There are many pitfalls that can easily be avoided with a partnership agreement, that we’ve listed out here.
Once you’ve set up your company and negotiated your partnership agreement, you will want to setup your business’s bank account. I would advise NOT going with the bank where you do your personal banking, because you don’t want that bank to be allowed to dip into your personal funds if they think something went wrong with your business account.
Here are a few tips in no particular order:
Setting up your business does not give you rights to the exclusive use of your business’s name in the marketplace. I feel like I should repeat that, since it’s such a common misconception. Trademark law is entirely separate from setting up a new business.
Most businesses have a brand name or logo that they want to use for marketing their new product/service. If you want to be the exclusive user of that brand, or put simply, if you want to be able to stop others from stealing your brand and capitalizing off of your hard-earned market share, you will have to get a Trademark.
This is best done early, because there’s a risk that you may use a trademark that you thought up yourself, but someone else already owns–meaning that you’re unintentionally infringing on their trademark and can lose your new budding company to their infringement lawsuit. It’s also best to do this first thing so that you don’t waste marketing efforts (and budget) on a trademark that you can’t keep. One of the saddest calls I have to make is when a business owner is just starting to hit profitability, only to find that they dumped 30K into marketing a brand that someone else owns.
Getting a trademark takes a deep dive analysis into your brand, the industry it’s in, what other trademarks are out there, and a legal opinion on its trademark viability (or lack thereof). It’s well worth the money to get this checked out early, before you waste any of your hard earned (and limited) marketing budget!
Unless you’re running a restaurant, your customers will be entering into a contract with you when they pay your company for whatever it is that it’s selling. If they pay you, and you don’t yet have a customer contract they’re agreeing to, you’re risking a LOT. Without a contract, the customer can claim that you agreed to just about anything they want to argue you agreed to, and then sue you for breach of an oral contract.
Getting a contract professionally written shields your company from this–trust me, I’ve seen thousands of toxic “customers” that run around with this scam against new business owners!
A great customer contract limits out all “oral agreements,” defines the scope of what you’re selling to them (your warranties, the duration, the timing, etc.), helps you avoid scope creep, and can easily keep a company successful despite shakedown artists.
Most companies will require you to do the following.
The law treats your new company as a separate legal entity from yourself–which is important for limited liability, but also your new business’s credit. This is monumentally important, and easily done once your lawyer sets up your business.
Most States, certainly Georgia, require that you get a business license for your company, too. These are normally acquired at the City office for the City that your company is based in (e.g., Marietta, Atlanta, Alpharetta, etc.).
Some (not all) business types require special licenses, such as construction companies, tobacco, alcohol, fitness studios, and massage companies You’ll want to check with the city your company operates in (as well as the State) to find out if you need any of these special licenses or permits in order to operate.
You will want to speak with a commercial insurance broker, ideally an independent one that can get quotes for you from multiple insurance companies. Your business is (hopefully) unique, and will need unique/tailored insurance that helps you if you actual need it–not fluff that won’t work.
We’ve been setting up new businesses for well over 10 years, now, and we’ve learned a thing or two! We pride ourselves on our responsiveness; when you call us, you’ll get a real person on the other end right away and we can normally book a free consult within 1 business day. We’re here to help you; reach out to us today!
