9 Startup Legal Issues Business Owners Must Know About

9 Startup Legal Issues Business Owners Must Know About

9 Startup Legal Issues Business Owners Must Know About

Starting a business is not only about appropriate funding routes and marketing plans. An entrepreneur must know about the legal requirements involved in running a commercial organization. Most of them still do not feel it is important to hire specialist startup legal services for getting assistance on the matter. Ignorance about startup legal issues can easily land a business into serious problems with grave economic consequences. It is essential that new entrepreneurs have an in-depth understanding of the legal requirements of their business and the ways in which they must be fulfilled. A list of some common but important issues that all startup owners must know about is being presented here.

1. Correct Legal Structure

One of the most important decisions that can have serious ramifications is choosing the correct legal structure for the new entity. There are various business types which can be used for registering a new company. Each form comes with its own tax and other compliance requirements and owners need to make a selection that matches their business needs. The decision also has the potential to affect the personal liability of the owner towards the enterprise. It will be pertinent to engage experts providing legal services for startups to get proper advice on the issue.

2. Separating Personal And Business Assets

Entrepreneurs must always keep their personal and business assets separate. The company must be treated as a separate legal entity and personal funds must not be used for its purposes. A failure to do so can make the owner personally responsible for business debts and his/ her personal assets can be used for settling them. Separating both the assets also gives the advantage of tax deductions which can be claimed for business-related expenses. Entrepreneurs must have dedicated bank accounts for their companies which must be used for meeting only business requirements.

3. Applicable Compliance Requirements

Corporate compliance is a major aspect of running a business which involves ensuring that a company is adhering to all applicable legal regulations and ethical practices. The applicable laws depend on a variety of factors like the legal type of the company, nature of its business, its geographical location etc. organizations must know the relevant documents they need to maintain and the procedures they need to follow to ensure compliance. Many companies start operations in a new location and ignorance of relevant laws can land them in serious trouble. For instance, a foreign company when beginning operations in India must know about the tax documents it needs to maintain besides the employment and environmental regulations it must follow. Hiring a startup legal services in India will be sensible as the agency will provide suitable guidance in the matter.

4. Intellectual Property Protection

One of the most important startup legal issues that all entrepreneurs must know about is intellectual property protection. It is necessary to protect the unique idea on which a product or service is based, to safeguard the company’s interests. Even the brand name, trademark and other symbols associated with the business must be provided proper legal cover. This will help in accessing appropriate legal remedy in case of IP rights infringements.

5. Employment Law Requirements

The biggest cause of legal troubles for new businesses is employee-related issues. Ignorance about employee laws which govern the wages, working conditions, leaves, and other rights of the workforce can land organizations into litigation. They must hire attorneys to know about all applicable regulations and take the necessary steps accordingly. Commercial organizations must get their legal team to draft proper contracts for hiring full-time as well as temporary staff members. They must also have an employee manual which contains details about workplace policies and procedures.

6. Properly Drafted Partnership Agreements

A lot of new businesses fail because of disagreements between the partners. The absence of partnership agreements which define the duties and obligations of all associates, lead to differences which have a detrimental effect on the organization. Companies must hire attorneys to draft comprehensive agreements which list all possible situations and the roles and responsibilities of the partners in each case. These documents will remove doubts and help eliminate the possibility of disputes between associates.

7. Insurance Cover For The Enterprise

A business needs protection from unforeseen circumstances and the best way to do it is through insurance. Safeguarding the company’s expensive infrastructure from hazards like fire and theft in addition to protecting the owner against personal liability can be easily done by buying a suitable policy. In case an employee or any other individual suffers an injury on business premises, the entrepreneur is protected from claims made for compensation.

8. Usage Of Non-disclosure Agreements

A business does not work in isolation and has to partner with other organizations or individuals to create, sell or market its product or services. They have to share their proprietary processes or items with other entities. When working with another firm, they must use non-disclosure agreements to protect their valuable assets. These documents prevent the other entity from sharing or using the information for any other purpose.

9. Full-time Or Casewise Legal Assistance

Startups must engage lawyers in order to know about their legal obligations and to run their business smoothly. The only assessment they need to make is whether they need full-time assistance or can hire professionals on a casewise basis. Businesses that do not hire employees and operate on a limited scale can engage attorneys whenever the need arises. On the other hand, organizations with vital IP assets, large workforce, and diverse operations must have an in-house team to meet its requirements.


Startup legal issues, if not addressed efficiently have the potential to derail an enterprise. Business owners, therefore, must make a comprehensive assessment of the legal requirements of their organization before starting its operations.


Amy Jones has been serving as an experienced legal expert in Ahlawat & Associates, who is related to Property Dispute Lawyer. She is a passionate writer and always on the lookout for opportunities for sharing her knowledge with legal community. Follow her company on various social media networks like: Twitter, Facebook and LinkedIn.