Ownership Issues For Your Startups

Ownership Issues For Your Startups Image


Ownership Issues For Your Startups

Startups are difficult in many aspects because of an associated sense of uncertainty, confusion, and receiving incorrect advice. One area filled with complications is the legality of ownership. Most startups include cooperation among many different creators; thus making clear ownership of the business and/or intellectual property hard to establish. The following are several issues and mistakes made by entrepreneurs with regards to ownership.

Common Issues

Problems can arise from the very beginning, with many startups first forgetting to formally set out the legal form of their business as either a limited liability company (LLC) or a corporation. This will affect the membership and the taxation of profit

How To Convert An LLC To A Corporation? Imagefor the owners, which can then incorrectly determine who is or is not an owner of the startup and their membership/profit rights, or lack thereof. Furthermore, when going beyond an interesting idea to actually forming a business, those involved withthe project have to discuss matters such as dividing ownership of the company, salaries, time and financial commitments, and roles and responsibilities. These issues must be negotiated beforehand since they prove essential when arguing for or against increased rights as an owner. Moreover, startups forget to have the proper employment documentation that must be signed by all employees.

While there are many other issues needing discussion in order to set up the legal ownership of a business, one of the most important is proper rights to intellectual property. Startups must have the relevant patents, copyright or design copyright, trademarks, and confidentiality agreements. These will protect the owner of the property by assigning them the right of receiving its profit and recognition – a very significant issue for entrepreneurs.


These issues for startups open them up to possible lawsuits that can be valid, if an alleged owner is not afforded their proper rights, or malicious if an individual seeks personal advancement from these loopholes. Official and formal legality is best established when a lawyer is involved and is offering solutions to these tricky problems. Seeking a lawyer’s counsel will ensure that all owners have the correct rights and profits from a startup that is legally warranted.

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