To avoid legal pitfalls, startups need the right guides

Law of averages: Most entrepreneurs overlook important legal requirements when starting a business, warns attorney Eugene Barnosky.

Chances are, as you prepare to launch your startup company, you will be eager to attack and complete the projects on your to-do list: draft a business plan, build a website, design a workspace, create a logo, brand your company, all tasks that most new entrepreneurs undertake with enthusiasm.

But many overlook the legal issues that could be critical to a smooth takeoff. Maybe because they don’t stir the creative juices. Or perhaps it’s assumed that legal considerations can be put off until the new business is up and running.

Dealing with the myriad legal issues facing startups may be lacking in glamour, but it is absolutely essential for the long-term prosperity of any new company. The most innovative entrepreneurial startup can be derailed if basic legal issues are not considered.

It is essential for an entrepreneur to consult with an attorney, an insurance professional and an accountant prior to the commencement of business operations, to protect the startup, to avoid costly litigation and to ensure compliance with ever-changing laws, rules and regulations.

Checking things off a legal to-do list can be overwhelming for startup owners who are understandably preoccupied with launching their businesses. That’s why it is so important to understand your business and get help early in the process.

Eugene Barnosky: Entrepreneurial assist.

Counsel can assist new business owners in several key areas, including making sure a company name is available for use, choosing and forming an operating entity (corporation versus LLC), choosing the “tax character” of a business (C Corp, partnership, etc.) and preparing shareholder and partnership agreements.

Outside help is also essential to establishing and navigating the landlord-tenant relationship, and to property purchasing; to protecting proprietary and customer data; to recognizing and analyzing trademark, copyright and patent issues; and to complying with regulatory, licensing and permitting requirements.

Companies live and die by their employment and hiring practices, and laws regulating those practices have been rapidly growing in number and complexity.

For example, it’s essential to have an up-to-date employee handbook and policies addressing workplace sexual harassment prevention. Under New York State Law, employers are required to provide anti-sexual harassment training for all employees by Oct. 9, 2019, and annually thereafter.

This year, the New York Election Law was amended to require employers to provide employees with up to three hours paid time off to vote. New York also recently enacted the Gender Expression Non-Discrimination Act, which amended human rights laws to prohibit discrimination based on gender identity or expression.

On the local level, Suffolk County recently amended its Human Rights Law to prohibit employers from inquiring about an applicant’s wage or salary history.

One step that’s easy to implement – but also easy to overlook, and potentially disastrous if disregarded – is compliance with the requirements for workplace postings and notices (e.g., the New York State Minimum Wage Poster, the New York Paid Family Leave Notice of Compliance and the New York Workers’ Compensation Board Notice of Compliance).

Posters are readily available online from reputable vendors at a nominal cost and on state and federal websites free of charge.

All of this only scratches the surface of what could be a legal minefield for the unwary entrepreneur. But these waters can be safely navigated with forethought and professional guidance.

Starting a business is a staple of the American Dream. Your ideas have the potential to change and improve the lives of your family and your customers. Don’t let your great idea become a costly liability because you overlooked your legal needs and responsibilities.

Eugene Barnosky, Esq. is a partner at Melville law firm Lamb & Barnosky LLP, where his practice focuses on education, employment, labor, municipal, real estate and land use/planning/zoning law.