Creating a new startup is one of the most exciting experiences any entrepreneur can undertake. Whether you’re new to the game and excited to share your idea with the world or a seasoned business person, you’ve no doubt realized that navigating the shifting legal framework for new entities is tricky. With one of the highest population densities of startups in North America, Vancouver is no stranger to big ideas, big wins, and big risks. If your latest invention, idea, or process is ready to go to market, below are five common legal mistakes startups make to be aware before you hit the ground running!
1. You Don’t Know What Legal Structure Fits Your Needs
Every startup is unique, and so are their needs where legal structures are concerned. From sole proprietorship to corporations, partnerships, and more, it’s important to know the difference between the many different options available and select the model that works best for your company. Doing so not only protects you by avoiding higher taxes, being subject to greater liabilities, and can help you tackle legal limitations. If you’re not sure what framework fits your needs, it’s imperative to retain legal counsel that can help you sort through everything in detail.
2. You Don’t Protect Your IP
Think about what makes your business unique. Is it your product? Your process and approach? What about designs, branding, and more? If you haven’t taken the necessary precautions to protect your intellectual property, you put yourself at significant risk for failure early on.
Pssst…not sure how to trademark your IP? Check out our beginner’s guide here.
3. Your Agreements And Contracts Are Lacking
While handshakes and promises carry a certain amount of weight in the business world, legal documentation is the only thing that you can rely on when it matters the most. From contracts that handle your agreements with investors to your documents that pertain to leasing a new space, hiring new employees, shareholder agreements, and more, you need an airtight approach that protects your best interests.
4. You Don’t Make the Most of NDA’s
Speaking of protecting your interests…if you’re not in the practice of utilizing NDA’s, you should be. By now, you’ve likely figured out that bringing your product, design, or practice to market involves sharing valuable details with a wide variety of outside sources. From seeking out investors to partnering with marketers to yes, even onboarding key team members for development, you need to go well beyond an “our lips are sealed” promise.
5. You Try To Go It Alone
Life in the startup lane can be rough; long hours, dwindling capital, and endless details to cover can feel draining. No matter how savvy you are, and no matter how tempting it may be to rely on the outside assistance of well-meaning investors, having a legal team you can trust is worth its weight in gold. The right team of lawyers will be there to support you from the very first day, guiding you through the many hoops, trials, and tribulations that stand between you and success. Better yet, they’ll be there to celebrate with you and help you plan for the future once you’re standing on solid ground.
Want To Make Sure Your Startup Goes The Distance?
Paperclip Law is here to help. Contact our team today to learn how we can help you succeed!