As a student attorney for the UPR Intellectual Property & Entrepreneurship Legal Aid Clinic, I learned that the entrepreneurial activity is vast, diverse and fast-paced. Nevertheless, there are seven (7) legal topics every entrepreneur needs to consider when starting a business, no matter the project.
1. Business Structure
How many people are starting in this venture with you? Is everybody contributing the same time or money? What is the main goal of your business, is it profit or a cause? Or both! Who is going to lead your project? Selecting a business structure will vary depending on how you answer these questions. Some examples include sole proprietorship (DBA), partnership, corporation (Inc./Corp.), LLC, L3C, cooperatives, non-profits, among many others.
2. Intellectual Property
According to Ocean Tomo, an Intellectual Property merchant bank, as of 2015, intangible assets represent 84% of Fortune 500 businesses’ value. When starting a business, you should consider what are your intangible assets, including whether you or someone in your team have developed Intellectual Property. As such, the next step would be to assess whether your creation or invention can enjoy the protection available through copyrights, trademarks, patents, trade secrets, or even rights of publicity.
3. Employees & Contractors
The third thing you should also consider is how much human capital you are going to need. Labor and employment are rapidly changing, and depending on your answer, your team can comprise of part-time or full-time employees, independent contractors, or even freelancers.
Taxes are everywhere and the decisions you make at the very start of your business will affect the way you will tribute. The amount of taxes paid may vary depending on your organizational structure, and your labor and employment choices. As part of this topic, you should assess potentially applicable taxes, such as income, property, corporate, sales, payroll, federal, state, and city.
6. Licenses and Permits
Licenses and permits cover a wide array of matters. From needing required professional licenses to being able to operate your business from home. This can also vary depending on how regulated -and by who- is your proposed venture, as well as where you’re located, among other factors.
7. Incentives and Funding
Finally, as you start your business you should consider what funding and legal incentives are available for you. Examples of incentives may include immediate write-off for setup costs, tax incentives, export market development grants, accelerator programs, and much more.
In this blog post, we listed the 7 legal topics entrepreneurs need to consider when starting a business. In future blog posts, we will explore in detail each category, and share different tools and resources you may benefit from. What other topics do you think entrepreneurs should consider when starting a business?