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Important legal considerations for startup businesses

Julianne Leybag
13 April 2018 2 minute readShare
Legal, gavel

When it comes to building a start-up, business owners must be able to have a good grasp of the accompanying legal considerations. My Business discusses some important legal issues that startup business owners must keep in mind.

In addition to creating a good marketing strategy, scouting for prime business locations and hiring the best staff, business owners must also pay attention to several legal issues which go hand-in-hand with setting up a business. Addressing these legal concerns ensures that business avoids even the most common legal mistakes.

Some important legal issues that business owners should consider are the following:

  • Non-disclosure agreements
  • Business licensing
  • Trademarks and intellectual property
  • Employee classifications
  • Accounting and finance considerations

Non-disclosure agreements

Signing non-disclosure agreements (NDA) is a must for business start-ups, especially if the startup is thinking of going into a joint venture with another company.

It is crucial for business owners to get everyone involved to sign the NDA as the NDA appropriately outlines which information are confidential and which can be shared. Putting everything on paper means that trade secrets are well-protected in case of any untoward incident.


Other kinds of written agreements that entrepreneurs should look at before starting their business include partnership/merger agreements (if applicable), employment agreements, buy-sell agreements (for partnerships) and shareholder agreements.

Ensure that all relevant agreements contain non-compete provisions that protect confidential business information, in the event of a departing employee or associate appropriating it for the benefit of your competitors.

Business licensing

Business owners must first accomplish all of the necessary business licensing requirements and determine the most ideal business structure for their organisation.

When it comes to choosing the right structure for the business, business owners must make sure to properly address legal factors such as taxes, business type, funding and other costs.



Business structures can range from a sole proprietorship to partnerships to corporations—each business type has its corresponding legal considerations. Moreover, don't forget to duly register the business in order for it to become a legal entity.

Trademarks and intellectual property

When it comes to choosing a business name, business leaders should do thorough research in order to make sure that their preferred name has not been used by other businesses.

Aside from avoiding possible duplication, doing ample research is also important to avoid possible copyright and trademark infringements, since these are very costly mistakes which might become hard to get rid of in the future.

Conversely, tech-heavy and innovation-heavy startups must also take all of the necessary steps to protect their products. This can be done by applying for copyrights, patents and trademarks.

Business owners are encouraged to seek assistance from a lawyer who specialises in intellectual property rights in order to make sure that their business is well-protected.

Employee classifications

Before hiring employees and/or staff, it's important to first know the difference between an independent contractor and an employee, in addition to becoming well-versed in relevant employment laws.

Some businesses are known to classify employees as independent contractors since independent contractors cost less even if their workload qualifies as an employee’s. It is best to avoid skirting the law, preventing grave repercussions for the business in the future.

One practical way to avoid employee-related issues is to devise a handbook which contains all rules and regulations that are relevant to the business. This handbook should cover everything from office code of conduct to bullying and harassment regulations.

Accounting and finance considerations

Ensuring that a proper and stable accounting system is in place is important if business owners want to make sure that their business remains up and running.

Investing time and effort in securing an accounting system might seem tedious and insignificant, but failing to focus on this particular area might set back owners by hundreds of dollars and could be a major source of headache for the company.

Business owners are encouraged to hire the services of a well-versed accountant to take things off their hands while still making sure that the business remains running. Investing in the right accounting software is also a surefire way of securing the business’ accounting infrastructure.

Important legal considerations for startup businesses
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Julianne Leybag

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