What to Ask: Business Operations and Startup Tips | Seth Heyman, Esq.
Starting a new business? UpCounsel attorney Seth Heyman explains what every startup should be asking their legal team about business operations and startup tips2 min read
What risks do we face?
It's important to understand the sort of risks that are inherent in the nature of the business in order to address them ahead of time.
Do we have an employee handbook and the other documents we need that will govern our relationship with employees?
One of the most common legal issues that small businesses eventually have to resolve are employment related.
What do we need to do to maintain the corporate veil?
A corporation or LLC can only protect its shareholders from personal liability if it is properly maintained.
Do we have a form for every contract we will need for the next six months?
Asking this question helps to ensure that all arrangements that should be in writing will be, rather than relying on handshake deals.
Do we have intellectual property that needs protection?
It is important that small businesses protect their trademarks and other intellectual properties. Failing to do so can cause huge problems as they start to grow.
What is the best way a small business owner can protect personal wealth and assets from business risks?
Obtain adequate insurance. Many startups and small business owners do not bother obtaining insurance coverage that addresses the particular risks inherent in their business type. For example, general liability insurance may cover personal injury damages, but does not cover economic losses that may be suffered by a third party as a result of errors or oversights, including a failure to meet contractual obligations.
What specifically are small business owners most confused about when you first meet with them?
They base their knowledge on Internet searches, rather than real-life experiences.
How can quality legal services help a small business grow?
By anticipating issues that may arise, and having the proper structures in place to deal with them ahead of time.
How can quality legal services help small businesses save money?
It costs far more to solve a problem than it does to avoid one. Many small businesses believe that legal services only help to resolve legal problems after they arise, but a good attorney helps clients to avoid them in the first place.
How can small businesses maximize the value of their legal team’s services?
Providing full explanations and asking the right questions.
Should business partners have the same amount of equity in a company? Why or why not?
In an ideal world, the answer would be yes, but when two partners have the same degree of ownership, they may reach an impasse that threatens the business if they disagree about something. If they want to have the same amount of equity, they should incorporate a method to resolve disputes ahead of time.
What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, Determine why the business is for sale., Find out if there are any human resources issues or outstanding lawsuits pending against the company.
Do you have any other essential legal guidance for startups that you haven't already included in this survey?
Yes, but they are too many to list here.