When you are starting a company, you need to be extremely cautious about legal mistakes that you might end up doing unintentionally.
The following are some of the most common legal mistakes that start-ups make:
Mistake #1: Not taking the help of professionals. You might scrimp on a few thousand dollars by using a contract available online. This can spell death for your business depending on which part of the contract you messed up.
You need to use agreements for contractors, employees, suppliers, etc., with the help of professionals.
Mistake #2: Starting your project when employed at another place. A lot of companies have agreements which say that all the products developed during the employee’s time in the company belongs to them.
Imagine working on a project so close to your heart only to hear this soul crushing news!
You need to read your employment agreement and disclose your personal projects so that you can gain full ownership.
Mistake #3: Co-founders split up when you least expect it. So when they leave the company, aren’t they taking away the shared IP with them too?
Not failing to incorporate can bite you in the back. Incorporate your business so that you don’t risk your personal assets. Choose the correct business entity as each of them have different implications.
Sign agreements with your employees, contractors or freelancers you work with. Clearly lay out their responsibilities, rights, obligations, etc.
Mistake #4: Not having a written record of the agreement where each of the parties sign it with full consent. Not only does an agreement ensure that everyone is on the same page, but it also helps you save from being part of a long-drawn legal battle.
Mistake #5: Not protecting your intellectual property.
If you have developed a unique product, technology, or service, you need to consider the appropriate steps to protect the intellectual property you have developed.
Here is how you can protect intellectual property:
- File for patent, trademark or copyright. Secure that for your company.
- Sign Non-Disclosure Agreements. It restricts the use & disclosure of protected information. NDAs can be enforced legally if someone breaches it, accidentally or otherwise.
- Invention Disclosure Records- It’s used to document company-related inventions.
- Conduct security audits on a regular basis .
- Make your employees understand what is sensitive information & how to protect it.
- Use Data Loss Prevention (DLP) tools like Teramind, SecureTrust, Digital Guardian Endpoint, etc.
- Hire the services of an IP firm if you have strong reasons to believe that you have to guard IP assets through patents.
Mistake #6: Not getting the name of your start-up cleared before launching it.
Launching your start-up is an exciting time for the founders. However, you must be cautious about each of the steps that you take so you don’t regret later.
#Conclusion: Making these mistakes can put your company at risk
Start-ups have a lot to think about as they begin. Legal issues are often low on the list of priorities, but a little bit of legal foresight can help prevent costly problems down the road. Invest in building your company on the right legal and financial foundation by connecting with Researchwire.