Startups face many decisions before getting the business 100% up and running. From choosing a name to hiring employees, decisions have to be made. Some of those decisions may have serious legal consequences if done without a firm knowledge of rules, regulations, and laws. If you are thinking of starting a business, or have already done so, read on to learn more about three legal concerns for startups.
You’ll need to choose a business structure. The most common business entities in Rhode Island include corporation, benefit corporation, workers’ cooperative, limited liability company, general partnership, and sole proprietor. The entity you choose determines the paperwork that may have to be completed, how profits are handled, and how income is taxed. Understand the entities before choosing one.
Your company name must comply with the Rhode Island law and not already be in use by another company. After searching the Rhode Island Department of State Corporate Database and coming up with a distinguishable name for your startup, you may file a name reservation online on the Secretary of State’s website.
Some startups will need to file documents with the Rhode Island Secretary of State. Others will not. For example, a corporation must file an application for Articles of Incorporation, pay a filing fee, then submit an annual report. General partnerships and sole proprietors are not required to register with the state.
Management of Your Startup
Who will run your new business? If you’re a sole proprietorship, that question is easy to answer! However, if you have partners or co-founders, things can get a bit tricky.
Setting out the management details of your company makes sense. Everyone knows where they stand. Disagreements may be resolved more easily when you get everything in writing.
If you are hiring management or employees, you may run into another of the common legal concerns for startups.
Address employment agreement concerns early in the life of your business. Key employees may sign employment contracts. You may also consider having certain employees – top managers, sales people, and scientists, for example – sign non-disclosure agreements to protect your startup’s confidential information.
You may even have some employees sign a non-compete agreement. This may prevent them from taking clients and proprietary information if they leave to open a competing business or work for a competitor.
Take Care of Legal Concerns Before They Turn into Problems.
Making the wrong decision or using the wrong type of document may have serious consequences down the road. Our attorneys have the experience to assist with your business concerns. Call us at 401-383-9899. You may also use our convenient Contact Form to let us you know are ready to get started. We assist clients throughout Rhode Island, including Cranston, Providence, and Warwick.