Law for Entrepreneurs — the Top Five Legal Priorities for Launching
When launching a new business in Montana, there are many moving parts to get squared away. A lawyer working to prepare the legal paperwork should be at the top of the priority list. Here are five of the most important legal issues to consider prior to launching. A lawyer is best suited to help navigate these steps.
1. Choosing a name wisely.
A business name marks the core identity of every business. Choosing a name is very difficult because it must be original and catchy and not infringe on another business name. It is imperative that the name is not similar to the name of another business, especially if the product is potentially confusing to the consumer or the business might one day expand its market into an existing business with the same or similar name. A new business should also avoid descriptive and generic names because these types of names have no unique brand name to protect. If litigated, the cost to defend a business name can be in the six figures, which is especially unnecessary when just launching. And if the new business is the second to file for the business name, the second business will lose the case. Then, after losing the case, the cost of rebranding can be enormous. The best way to search existing business names in Montana is by visiting the Montana Secretary of State website and searching:
2. Choosing your business structure.
An important decision is the type of organizational structure. To answer this question, the entrepreneur must address the desired level of control over the business, the required degree of formal organization, the need to protect against liability for business actions, the ability to attract investors, and tax considerations. Small businesses often choose a Limited Liability Company, but it is important to consult with an accountant and lawyer to understand the tax implications and legal liability to make sure the entrepreneur makes the best decision for the circumstances of the new business. Once the business structure is determined, appropriate forms will need to be filed with the office of the Montana Secretary of State.
3. Preparing an operating agreement and articles of incorporation.
If the business is best suited to be a Limited Liability Company, then the Operating Agreement and Articles of Incorporation must be filed with the business registration. The Operating Agreement sets forth many specific details on how the business will be managed, such as accounting, liability, the authority of any managing members, what happens in the event of a partner’s death, bankruptcy, sale of ownership, and much more. The Operating Agreement is a good time to really organize and consider all of the many variables and life events that ultimately will impact the business.
4. Registering your business and applying for a trademark, tradename, copyright, patent, and domain name protection.
If the first to file, a business name registered in Montana will be protected against similar names offering a similar product in Montana. A trademark, tradename, copyright, patent and domain name registration can protect the name of the new business, goods, and services at a national level. These protections prevent others in a similar industry in the United States from using an existing and registered trademark, tradename, copyright, patent, and domain name. Businesses in every state are subject to infringement lawsuits, which are very costly. In fact, if there is trademark infringement, the violating company must disgorge all profits resulting from the infringing use of the trademark. Prior to launching, it is important to check prospective business names, products, and services in the official trademark database, which can be found at https://www.uspto.gov/trademark.
5. Identifying laws, regulations, licenses, and permits.
Before launching a new business, an entrepreneur must research and identify relevant laws and regulations. Regulations serve as federal and state safeguards to protect businesses, customers, employees, and industries. Specifically, there are laws and regulations to consider in advertising and marketing, taxi businesses, employment and labor, finance, intellectual property, online business, privacy, environmental regulations, regulation of financial contracts, workplace safety and health, foreign workers, and employee eligibility. Also, as an employer with employees, the entrepreneur must comply with the Montana Department of Revenue tax reporting, unemployment insurance, employment law, and public health and safety. There are many areas for a new business owner to understand. Additionally, the new business will need to acquire both a federal tax identification number and a state identification number.
Always get a lawyer to help navigate the business launch. It is much easier and less expensive to have a successful launch at the get-go. Congratulations and best wishes to the entrepreneur.
This information is not intended as, and should not be taken as, legal advice. The use of the information herein should not be taken as establishing any contractual or other form of attorney-client relationship. Do not act or refrain from acting based upon the information provided without first consulting an attorney about your particular factual and legal circumstances.
Montana State University offers affordable legal services to students. Schedule an appointment at https://asmsulegalservices.org/.
