Top Legal Issues Every Start-Up Faces

Top Legal Issues Every Start-Up Faces

Launching a start up is exciting, but there are some legal issues that you should to be aware of beforehand. Here are some of the most common legal issues that start ups face.

1) Business Licensing

For the most part, licensing your business is a relatively straightforward affair. The federal, state, and sometimes local governments want to know who you are and what you’re doing so they can ensure all of their paperwork is in order. This is particularly true for taxes – Georgia generally does tax tangible things (toys, furniture, etc., with some exceptions), but does not tax many services (handymen, accountants, and so forth). Even if you don’t think you’re doing anything that would be taxed, you may need to register anyway just to be on the safe side.

Digital start ups typically need fewer licenses than physical start ups, who may need to show compliance with health, safety, and other regulations.

2) Business Structure

Every business needs to have an official structure to it – this will affect things like how you’re taxed and what sort of reports you’ll need to make. The most common structures are as follows:

  • Sole Proprietorship: In this structure, a single person owns an unincorporated business and is generally responsible for both profits and payments.
  • Partnerships: Partnerships are broadly similar to Sole Proprietorships, but have two or more owners that share responsibility. Note that partnerships do not have to be equal – rather than being 50/50, it could be 75/25, 50/25/25, or a more unusual combination. Atlanta start ups considering a partnership should ask for legal advice about the best way to set things up for their specific needs.
  • Corporations: Corporations are able to sell stock in the company (typically to its initial owners, and then later to other people), but is also recognized as a separate legal entity. This separation can help to limit the legal liability of the owners, and is generally the preferred form for larger companies.
  • S Corporations: S Corporations are a special type of corporation that pass more things on to their shareholders, preventing the double taxation that normal corporations are obligated to deal with. However, there are some limits on this, including how many shareholders the company can have and the requirement to be a domestic company.
  • Limited Liability Company: A Limited Liability Company is a special setup that takes the legal burden away from the owners and adjusts it more towards the business itself.

3) Intellectual Property

Many businesses will have at least some sort of intellectual property, even if it’s just the company’s name. Atlanta start ups should always act to protect their IP to the fullest extent of the law – this helps stop competitors from stealing your ideas and profiting without your permission.

It may be too late to start protecting your intellectual property once someone starts using it, so it’s absolutely vital that you get everything registered and protected as quickly as possible. If you’re planning to launch a company in the Atlanta area, don’t take more risks than you have to – contact Douglas Park Law Firm for qualified legal guidance.

 

Disclaimer: This list does not cover every legal issue a start up might face. Factors like – but not limited to – industry, location, capital, and number of employees may affect the legal issues your start up faces. Legal issues are subject to change as the law changes, and as such Douglas Park Law Firm cannot guarantee that this information is fully up-to-date. In order to be sure that you are fully compliant with the law, it is strongly recommended that you consult a qualified business attorney before launching your business.

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