Congratulations! You’ve launched your new business. Now the tough part – what steps will you take to succeed?
Most successful clients seek legal assistance with four key strategies: 1) Entity formation and Governance, 2) Intellectual Property protection, 3) Employee Management, and 4) Proper structuring of major transactions.
What should you do to fulfill these strategies? We’ve found that most new companies require the same things to get off to a strong start.
Entity Formation and Governance
- Form of Entity
- Not everybody needs an LLC. There is no one-size-fits-all business entity. Each new business must consider its needs in a few key areas: (1) limited liability protection, (2) fund-raising, (3) tax structure, (4) anticipated size of business, and (5) desires for operational control. Many of these considerations are complex, and it is wise to seek guidance as to which entity type best matches your business needs.
- Operating Agreement/Bylaws
- If you do not draft a customized operating agreement or bylaws for your company, the state will often choose the rules for you. These rules govern vital concerns, including who will control what within the company. Most savvy entrepreneurs prefer to structure their companies as they see fit, rather than how the state sees fit.
Your company’s intellectual properties are often its most valuable assets. They include items that are core to the building of your brand, such as:
- Trademarks – logos, slogans, and your business name
- Copyrighted Items - original works of authorship, such as key documents or your web site
- Trade Secrets - Confidential items that give you an advantage over your competitors.
Although the law creates your intellectual property rights in your trademarks and copyrights, you only have a limited ability to protect those rights without further action.
Without further protection, your trademarks are only safe where they are used in commerce. Federal trademark registration automatically establishes use in commerce for your marks throughout the United States, and gives you recourse to the federal courts for trademark infringement wherever one of your competitors may try to wrongfully use or dilute your marks. [For example, a competitor may try to claim some derivation of your logo as their own, or use a business name that is likely to confuse consumers about the identity of your brand].
Copyright registration allows you to sue for later copyright infringement wherever it may occur. Registration also provides a powerful deterrent to infringement, because it makes available attorney fees and statutory penalties that cannot be had otherwise. Without registration, you only have recourse to weaker state claims, such as tortious interference with business advantage, on which you may only recover pennies on the dollar.
Trade secrets are only protected under the law to the extent that they are valuable because of their secrecy, AND the owner of the secret takes reasonable measures to protect it. The best way to protect your trade secrets, in addition to limiting their distribution, is to have contracts providing for penalties in case somebody misuses or discloses (“misappropriates”) your trade secret(s).
Finally, most businesses will need to have contracts in place to govern their important relationships.
- Leases – Landlords will typically present lease agreements for your signature, but it wise to have them reviewed, because commercial leases often contain unnecessarily harsh measures, and landlords are often willing to negotiate terms in a commercial context.
- Client Agreements – Your agreements with clients will be among the most important documents you possess. They must strike a balance between welcoming a client’s business and protecting your interests. Drafting these agreements properly requires en empathic mind, as well as a keen nose for what can go wrong without the proper protection in place.
- Employee Contracts – Finally, effective contracts with your employees and independent contractors are vital. Employers who proceed with only a handshake risk considerable exposure that they may avoid or minimize with a small investment on the front end.
Call us at (503) 224-9946 to set up an appointment to discuss the needs of your small business. We will help guide you through the steps.