Three Legal Tips for Startups

Three Legal Tips for Startups
December 9, 2018 No Comments Business Melissa Magee

Establishing a business is not only about the prestige but also the efforts. And usually, legal issues become the most overwhelming problem in that matter because small mistakes may end up as a big fine. For example, employees’ rights in the US are relatively more well-protected by the law than other countries. If you are an employer who makes a lousy contract, your employees can file a lawsuit against you if you dismiss them. Not only does it cause you to lose money but also your reputation.

Below are the three legal tips that every entrepreneur must know before they start a new business.

Drafting Your Contracts Professionally

You need to hire an employment lawyer to devise your employment contracts. Do not take chances in this process because as stated in the opening paragraph, a disgruntled employee may sue you and drain your company’s budget.

However, you must know the fundamentals issues that an employment contract needs to address:

1. Conflict of Interest and Confidentiality Agreement Clause

Conflict of Interest clause regulates how your employees’ behavior matches your company’s interest. It discusses how they should interact with other companies while they are working for you. If you allow your employees to take a second or third job, you have to make sure that such decision will not affect their performance at work.

2. Job Poaching Clause

An employee who gets fired has the possibility of soliciting others to follow the same step. This clause addresses that issue.

3. Employee Copyright Clause

This clause proclaims the ownership of any invention and ideas created by the employees during their working time. App developers must address this issue meticulously.

4. Company’s Property Usage Clause

Your employees will have access to your company’s equipment, technology, and information once you hire them. Company’s property usage clause notifies the employees about the rules of using those facilities.

5. Dispute Resolution Clause

This clause affirms negotiation as the preferred means to resolve possible disputes in the future. It saves your company from dealing with a surprise lawsuit filed by a former employee.

 

Outsourcing and Its Legal Issues

Outsourcing has become a business trend that enables limitless opportunities for startups. It reduces the cost of service and equipment significantly. For example, a small manufacturing startup should focus more on the research and development of their products instead of management. In that case, they can use an outsourcing service like aloha payroll to manage and calculate their employees’ attendance, performance, and rewards. The startup does not need to invest in hiring new finance experts and upgrading their inventory.

However, you need to be concerned with possible legal issues that may come up in the future. Outsourcing means entrusting your company’s date to a second party. And thus, privacy and confidentiality should be the primary focus here.

Second, if you do not contribute to the local community by employing a domestic workforce, your company’s reputation can be at risk. If the union finds out, they may sue you. Therefore, you have to consult a local lawyer to know how the authority controls outsourcing.

Devising the Right Legal Disclaimers

The third important thing for a startup is to create legal disclaimers for either their products or service. They can prevent consumers from being at odds with you because they misunderstand the function of your products. For example, your company develops a paid language learning app that promises the learner to succeed in a specific test. In that case, you have to state explicitly the circumstances that will support the intended outcome, like being discipline with the learning schedule, working on all of the exercises given by the app, etc.

Dispute with customers can damage your company. Therefore, investing in its prevention is way better and more beneficial than resolving it.

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