| | APRIL 20228WHAT STARTUPS SHOULD DO WHEN THEY ARE NOT LEGALLY FIT?P racticing legal hygiene is critical for any company's success. Many entrepreneurs work day and night to make their startup or venture a success but over-look the company's legal needs. This can put them at the risk of legal backlash. Having a company's legal health in check makes sure it is in control of the legal risks and safe from a lawsuit.As a startup owner, entrepreneurs work on a tight bud-get and have even lesser resources to spend on legal needs. However, it is significant for startups to appoint or consult a lawyer in the initial stage to avoid any sort of legal crisis in the later stage. Investing in a professional legal consul-tation saves not only a startup but also well-established companies from getting shut or sued. One of the most pop-ular legal incidents happened in 2013 when the Swedish telecom giant Ericsson sued a lot of smaller telecom com-panies from India and China. Some of the Indian compa-nies such as Micromax, Intex and Lava mobiles were highly affected because these companies were using Ericsson's patented products.Several legal issues can affect a startup's legal perfor-mance and overall business health. Many startups have al-ready started using online legal toolkits to customize legal documents and save their business from legal pitfalls.Some of the common legal issues that a startup might face are:Registering a Business EntityAdopting a legal route in the registration of a business en-tity is vital. Whether it a sole proprietorship or a partner-ship, legal documents of business registration should be made to avoid legal disputes or failure of the venture. For instance, three partners started a café without entering into any agreement in the initial stage. After a few months, the café started yielding profits but resulted in disputes between the co-founders regarding their role and share in the business. This further led to legal disputes that en-forced the partners to dissolve the partnership and exit from the business. Thus, a cofounders agreement defining the role and responsibilities of each partner including eq-uity ownership, non-disclosure agreement and dissolution of the partnership is needed for smoother operations of the business.Employment contractsEmployers are the asset of any startup or any company. The relationship between an employer and its employees should always be amiable and free from disputes and dis-agreements. In this regard, employment contracts play a crucial role to avoid problematic situations in the compa-ny. It is proof of the employer and employee relationship. It also clearly defines the path of the employee's journey in the organization.By Himanshu Gupta, Founder & CEO, LawyeredHimanshu Gupta,Founder & CEOVANTAGE POINT
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