With our recent economic expansion and favorable regulatory and tax environments, Texas has become an excellent starting place for new businesses. Startups have an excellent opportunity for growth in the state, but there are still plenty of legal issues to consider. Here, we’ll go over a few of the key legal considerations startups should take care of before beginning their operations.
Choosing a Legal Entity
The first item is to choose a legal entity for your startup. The most common of these are:
- Sole proprietorship
Each of these has its own benefits, rules, and tax implications, and the structure you choose will ultimately depend on the nature of your business, your ownership structure, your size, and your business goals. If you are not familiar with the types of business entities and need some advice, you may want to consider meeting with a business formation attorney for assistance.
One of the biggest assets many startups have today is intellectual property. Taking measures to protect your IP is vital to your success, especially when it comes to carving out your own place in the market. Failure to take steps to protect your IP in contracts, agreements, and operations could result in crippling disputes and expensive lawsuits.
Your interactions with employees, shareholders, clients, contractors, and other entities will need to be protected with carefully drafted written agreements. Documents such as non-disclosure agreements, operating agreements, and shareholder agreements should be outlined and structured in a way that protects your business and assets.
Employment law is another matter to attend to. Regulations include equal employment opportunity laws, FLSA, and Texas Payday Laws, to name a few. The latter two can be a particular challenge for startups that enjoy swift growth and find themselves shorthanded. In these cases, you may need to be extra careful to comply with overtime pay requirements.
While Texas tends to have fewer regulations on small businesses than other states, there are still laws that you will need to comply with in order to keep liabilities to a minimum. Adherence to workplace safety laws and corporate structure requirements will help you minimize liability from risks that may stem from your business operations. In addition, proper contracts, agreements, and safety precautions will protect you from litigation.
In all your business operations, you must make certain you are in a secure legal position. Consulting with experienced Texas business law attorneys, such as those at Bennett, Weston, LaJone & Turner, P.C., will help your startup get going on the road to success.