5 Legal Tips Every Entrepreneur Should Know

Often, starting your own company means plunging into the unknown. After all, rarely does anyone have the experience and knowledge of how to do it. It may happen that too much attention is paid to the little things, and the most important thing is forgotten — why the business project was started at all.

Business owners are frequently confronted with the necessity to protect copyright and intellectual property, as well as challenges with documentation and conducting business. Let’s have a look at how you can solve the basic problems.

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1. The problem of intellectual property protection

A good startup implies a unique idea, an exclusive service, or a product. To avoid becoming a victim of “intellectual robbery”, use the law to protect your creativity. Specifically, get a patent. You can patent a trademark, a brand, a name, or even an idea if you can back it up with a working prototype. 

Registration of a patent for an invention is a long (up to three years) and complicated procedure, so it is worth considering whether your idea is really new and needs protection. If you are determined – write an application with descriptions, drawings, and formulas and contact The United States Patent and Trademark Office.

Difficulties also arise when using someone else’s patented trademark.

Q: I bought children’s clothes (with a patented trademark). Can I place my own photographs of these clothes on the website of my online store, but do not indicate the trademark on the website.

Lawyer’s answer: If you purchased the specified clothing legally, you can post photos even with an indication of the trademark. But if you hide the name of the manufacturer or pass it off as your own, then this can be considered as misleading buyers.

2. The Copyright issue

It is not only entrepreneurs who are often confronted with copyright. Stolen someone else’s photos, retyped texts, copying corporate identity – these are the most common violations. But in this conflict situation between the copyright holder and his follower always win the copyright holder. And if the matter cannot be settled by peaceful negotiations and apologies, an administrative or even criminal case is initiated. For all the obviousness of the problem, lawyers are often asked questions about the legality of using someone else’s work.

Q: I opened a shop for printing photos and lettering on souvenirs. What do I need to do to be able to print a game logo on mugs and t-shirts?

Lawyer’s answer: In order not to break the law, you should:

  • Check if the logo is protected
  • Conclude a license agreement with the copyright holder

3. The problem of constituent documents

The constituent documents serve as the basis for the activities of any legal entity. Therefore, any changes that you want to make in them (for example, change the patronymic of the founder or legal address) require a large number of other accompanying documents, confirmations, and statements. The list of necessary papers can be obtained from the tax authority or asked about it from a lawyer.

Startup people are creative people, and often carelessness in relation to business papers leads to their damage or loss. To retrieve documents, also request duplicates from the tax office.

4. The problem of preparing contracts with counterparties (partners, customers, subcontractors)

The most common problem is “money was paid, the work was not done” or “everything was done, but there was no payment”. These situations arise for two reasons. The first is that there is a signed contract, but it is not drawn up correctly and does not fully protect the interests of the entrepreneur. The second reason for the difficulties arising is when there is no contract, but there is an oral agreement and friendly relations. In this case, the relationship is not legally formalized in any way, and there is no one to make claims.

When concluding an agreement, correctly prescribe the subject of the agreement: what has been agreed upon, on what conditions, the rights, and obligations of the parties. Specify the exact terms of work, the procedure for payment, even special terminology, if necessary.

A good template contract, written by a competent lawyer, will protect you from dishonest counterparties.

5. The problem with doing business

The entrepreneurial activity involves the systematic extraction of profit. There is a great temptation to open an online store or a private service office and start “making a profit” without any legal registration. But you shouldn’t do this. The fine for illegal business is small, but it is better to have a legal business and a clear conscience. Much stricter penalties are imposed on those who work without a license where it is necessary.

Q: Is it necessary to obtain a license to open a children’s club? Is this an educational activity?

Lawyer’s answer: A license is not required to open a children’s club, unless the club will conduct educational activities under a program, for example, preschool education.

As you can see from the article, beginners and even experienced entrepreneurs could avoid many problems if they received professional advice on time. A question asked in a timely manner to a lawyer not only saves a businessman’s money and nerves but sometimes also saves his reputation.

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