What to Ask: Employment Law, HR, and Incorporation | Annick Fuchs, Esq.
Starting a new business? UpCounsel attorney Annick Fuchs explains what every startup should be asking their legal team about employment law, HR, and incorporation2 min read
What is the best legal entity form I should use?
Why is this important? To shield liability and to save taxes and to facilitate bringing investors on board.
Do I need to protect my IP?
Why is this important? Because your IP might be a huge asset going forward, so you want to see whether this is something you need to protect from the start, especially where it is unclear which founder created the IP. IP rights might be a huge asset for obtaining funding from investors as well.
Do I need terms and conditions? Why is this important?
Because if you have customers, you want to make clear what rights and obligations each party has and to shield yourself from too much liability.
When I bring new people on board, what is my best way to, especially if I am low on cash (equity compensation)? Why is this important?
Because more often than not, business owners bring people on board and it is later unclear what status they have/what rights they have, etc.
Will I need to respect anything in my product when expanding globally? Why is this important?
A lot of businesses start in the U.S., but then want to expand eventually. But they set up the product such that it is U.S. only, so changes later in the game become extremely complex. Better to think about that in the beginning.
What is the best way a small business owner can protect personal wealth and assets from business risks?
Create a legal entity.
What is the best way a small business can maximize its tax deductions? (Optional)
Create a legal entity.
What specifically are small business owners most confused about when you first meet with them?
How can quality legal services help a small business grow?
Be favored during funding because legal homework was made, and be shielded from liability.
How can quality legal services help small businesses save money?
Be shielded from liability and save taxes when establishing the right legal entity.
How can small businesses maximize the value of their legal team’s services?
Should business partners have the same amount of equity in a company? Why or why not?
No, because then each can block the other person's decision unless you draft the legal entity documents differently or hire an outside CEO, etc.
What are the top three things a small business owner should be aware of when purchasing an existing business?
Review the business's tax returns to determine profitability and if there is outstanding tax liability. How long have the employees been there? Are there any key employees who would be hard to replace? 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?
I have slides to show the differences between LLCs and corporations.