Boasting one of the largest entrepreneurial markets in the country, San Diego is rife with opportunity. Each year, thousands of entrepreneurs look to America’s Finest City to start their small business and grow their brand.
La Jolla-based Ferdinand IP attorney Dan Lacy says that, in addition to marketing, sales and the bottom line, small businesses need to know their way around common entrepreneurial legal pitfalls, especially if dealing with intellectual property.
Whether you're considering starting a business or having a growing one in the works, Lacy notes it's essential for entrepreneurs to consider and answer the below questions.
Is my company a properly formed LLC or Corporation?
Entrepreneurs are confronted with several distinct choices of entities including sole proprietorship, general partnership, C- and S- corps, LLC and limited partnerships. This is a crucial first step because without a formal declaration with the state, your default will be as sole proprietor or general partnership. Making the right designation can save you from higher taxes and potential future liabilities.
Does my company have a favorable standard-form contract with clients and vendors?
Contracts vary dramatically from business to business and industry to industry. Having a standard contract that’s tailored to your needs – regardless of the industry – allows entrepreneurs to quickly and confidentially enter into agreements with clients and vendors.
How have I protected my company’s intellectual property?
Often a company’s brand and associated intellectual property are one of the most important assets they possess. Entrepreneurs should consider all forms of protection – including patents, trademarks, copyrights and trade secrets. Confidentiality and assignment agreements should also be considered when appropriate. Entrepreneurs often overlook this due to perceived costs and complexities associated. However, protecting your intellectual property not only helps facilitate growth, it also prevents future losses.
Does my company name, brand or tagline potentially have trademark, domain name issues or other concerns?
Every entrepreneur knows that choosing the right brand name, tagline or associated domain can boost recognition and growth. However, before launching it is imperative to survey the landscape to see if your brand or marketing campaign is going to conflict with an existing business. A little research will go a long way towards avoiding costly litigation that could ultimately end up taxing any existing brand equity.
How are we characterizing personal assets being used to run the business?
Most entrepreneurs have to tap into their own assets to launch and maintain a company in its infancy. Establishing procedures and documentation dividing personal and business assets is imperative. Clear procedures to address things like banks accounts and lines of credit will work to avoid business creditors seeking repayment from personal assets.
What sort of employment procedures and records do we have in place?
Have a plan established before your first hire to streamline growth and avoid potential future problems. All entrepreneurs should have a set of standard employment agreements, employee handbooks, confidential information and inventions assignment agreements in place with all employees.
There is a thrill that comes with being an entrepreneur and small business owner. However, there is also an inherent risk-reward trade-off that comes with any new venture. Knowing and having answers to common legal pitfalls will go a long way to maximize that reward while downplaying your risk, adds Lacy.