Starting a new business is a brave step and it can be very rewarding for business owners both personally and financially. Nonetheless, the reality is that many startups fail within the first year. There are several reasons for this, but sometimes it’s as simple as neglecting to take some relatively simple legal steps.
Here are some important legal steps that all startups should take:
Choosing the right company name
The company name is the starting point of any brand. You want a name that stands out and is unique. The difficulty here is that the market is saturated, and many company names are already taken. Before naming your company, it’s important to conduct a trademark search to ensure that your chosen name does not violate intellectual property laws. Once you’ve conducted this due diligence, you should go on to protect your name through trademarks so that nobody else can copy you.
Picking the appropriate business structure
If your new company is starting as a side project, then operating as a sole proprietorship may suit you. This means that you retain full control of the company and you can start trading very quickly from your own personal bank accounts. The downside of this is that you may be held personally liable if you get into debt or face any other legal challenges.
A Limited Liability Company (LLC) structure gives you more protection. Your business assets and personal assets will be separated, meaning that creditors cannot come after your personal assets should the company get into debt.
Taking the aforementioned steps will help to protect your business legally. The more information you have before starting your business, the greater your chances of success.