Pre-Launch Legal Steps for Startups

The launch of a new business can be an exhilarating period. Allowing that rush of enthusiasm to push you into a hasty, ill-organized launch, however, could all but ensure your new enterprise’s failure before it has even opened for business. I usually recommend that business owners begin discussions with our Arizona-based law firm from four to six months before their anticipated launch date. This schedule gives everyone the time needed to sort out such important issues as:

Business Formation

Organizing your business entity is one of the most crucial actions in the startup pre-launch process. Whether you decide on a limited liability company (LLC) structure or some form of corporation, your choice will have major implications for your future legal protection, tax structure, and shareholder distribution. Get your attorney involved with these discussions as far ahead of time as reasonably possible. Even processing the business formation through the Arizona Corporation Commission can take weeks.

Before you fill out the Articles of Incorporation forms required by the Arizona Corporation Commission, make sure to go over each section of the form with your business attorney.

Insurance Questions

You should pursue the right types of insurance for your business long before you open your doors. You will need liability insurance to protect your business against both property damage and personal injury lawsuits, as well as workers’ compensation insurance in accordance with Arizona law. You must vet any contractors you plan on working with in terms of their commercial insurance coverage and be prepared to enter into any necessary bond. Internally, key man insurance and other types of coverage can help you protect the integrity of your company from day one. Your attorney can help you sort through these questions and concerns.

Real Estate Considerations

If your enterprise will require commercial real estate such as offices, warehouses, public housing or other such spaces, you may feel pressure to sign a personal guarantee as the first step in securing a commercial lease. This personal guarantee can make landlords more willing to offer a multi-year agreement to a new LLC or corporation by reducing their financial risk, while allowing you to launch your business with the right physical resources. Unfortunately, such an agreement can expose you to the risks of eviction, lockouts, or property seizures under Arizona commercial real estate law. Sit down with a business attorney well in advance to decide on which limitations and modifications you should insist on, from limited personal guarantee terms to a surrender clause.

Intellectual Property and Branding Matters

Many startups wish to make use of unique trademarks and other forms of intellectual property. Be aware, however, that the necessary registration processes can take quite some time. A copyright registration typically takes about three months, while the entire journey to register a patent may take 13 to 18 months. Even though your trademark is legally valid from the date you actually filed it, simply getting that filing approved may take four to six months. You need to give your attorney at least this much time to move your IP efforts forward and coordinate with any legal specialists to make certain it occurs.

Company Contracts and Policies

You don’t want to launch your startup without the proper complement of contracts and policies firmly in place. The lack of a clear sexual harassment, medical leave, or discrimination policy, for instance, could make you vulnerable to employee lawsuits, investigations by regulators, or other costly crises. Ask your attorney to draw up and finalize all the standard agreements and documentation you might need to ensure smooth operation once you open your doors.

For more Harrison Law Blog posts about starting a new business click HERE, HERE, and HERE.

© 2020 Matthew W. Harrison and Harrison Law, PLLC All Rights Reserved

This website and article have been prepared by Harrison Law, PLLC for informational purposes only and does not, and is not intended to, constitute legal or financial advice. The information is not provided in the course of an attorney-client relationship and is not intended to substitute for legal advice from an attorney licensed in your jurisdiction.