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  • Ball & Barry Law

Five Legal Considerations for Starting a Business

Starting a new business is always an exciting prospect. However, it demands careful thought and planning. Rushing into such an endeavor without the proper guardrails in place can quickly land you in legal, ethical, and financial hot water. The last thing you want is to start your business on the wrong foot.

When starting a business, you must account for many legal considerations. Failing to address these issues can lead to personal and business liabilities and costly legal battles down the road. Every entrepreneur should consider these five key legal considerations before starting a new business.

Choose the Right Business Structure

One of the first legal considerations entrepreneurs must address is choosing the right business structure. There are several options to choose from, including sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. Each structure has its advantages and disadvantages, so choosing the one that best fits your business and financial needs is imperative.

Sole Proprietorship or Partnership

For example, suppose you're starting a small business and want to maintain control over all aspects of the business. A sole proprietorship or partnership may be the best choice in that case. Banking is more straightforward, and there are typically fewer forms and fees required with this business structure.

On the other hand, opting for a different type of structure may help a new business establish credibility more so than simply operating as a sole proprietorship or partnership.

Limited Liability Corporation (LLC)

A corporation or LLC may be better if you need limited liability protection and want to attract investors. LLCs don't have as many state-imposed compliance requirements and ongoing formalities compared to sole proprietorships, general partnerships, or corporations (either taxed as an S-corporation or a C- corporation). But LLCs cost more to form and maintain than a sole proprietorship or general partnership. One example of this is that owners are required to pay an initial formation fee to the state where the LLC is formed.


S-corporations are often better for smaller businesses. For federal tax purposes, they pass corporate income, losses, deductions, and credits through to their shareholders. However, they aren't ideal for every small business as they require ongoing filings and fees to stay in compliance, must have a board of directors, and have stricter rules regarding meetings and record keeping.


C corporations are the most common type of corporation. Forming as a C-corporation can provide structural advantages that the S-corporation or other business formation options such as the LLC can't. C-corps are more attractive to investors and offer limited liability. However, both the corporation and the shareholders are taxed on business earnings.

With so many options for your business structure, it's in your best interest to consult with a knowledgeable Denver business attorney before determining how your business will form. There are many factors to account for, including tax liabilities and legal compliance.

Register Your Business

Once you select a business structure, you must register your company with the appropriate government agencies. This typically involves registering your business name and obtaining permits and licenses to operate legally. The requirements for registration vary depending on the state and local laws, so it's important to work with an attorney who is well-versed in the legal requirements in your area. Failing to properly register your business before operating can lead to fines, penalties, and legal troubles in the future.

Protect Your Intellectual Property

Intellectual property (IP) is a critical asset for many businesses. IP includes things like trademarks, copyrights, trade secrets, and patents and is often a significant factor in the success of a business. If you want to prevent others from copying or stealing your business ideas and materials and profiting from them, you must protect your IP.

Protecting your IP involves registering your trademarks and copyrights with the appropriate government agencies or filing for a patent to protect a new invention. You want to ensure that you do all you can to have legal protection for your IP. The best way to accomplish this is to enlist the expertise of a Denver business attorney.

Understand Employment Laws

If you plan to hire employees for your business, it's imperative to understand the various applicable employment laws at the national, state, and local levels. These include:

  • Minimum wage laws

  • Overtime laws

  • Child labor laws

  • Anti-discrimination laws

  • FMLA and employee leave laws

  • Whistleblower protection laws

  • OSHA workplace safety rules

  • The Fair Labor Standards Act

Failing to comply with these laws can result in costly and lengthy legal battles, fines, and penalties. All businesses must stay up-to-date on the latest employment laws and enact policies and procedures to ensure compliance across all aspects and departments of their operation.

Draft Solid Contracts

Contracts are essential for any business as they help protect you from potential future legal disputes with various parties. Whether hiring employees, working with vendors, or entering into partnerships, it's critical to have a solid contract outlining the terms and conditions of your agreement and what happens if there is a disagreement.

A well-drafted contract can help prevent misunderstandings and disputes. It will provide a clear path forward if there is ever a disagreement. By working closely with an experienced Denver business attorney, you can ensure that your business contracts are legally enforceable and provide the protection you need.

Do You Need Help Starting Your Business?

Starting a business requires many legal considerations. Unfortunately, many entrepreneurs don't think about some before it's too late. But when you work with a business attorney, they will navigate these legal considerations for you, ensuring that you have done all you need to do before opening your doors.

By selecting the right business structure, registering your business, protecting your intellectual property, understanding employment laws, and having reliable business contracts in place, you can help prevent legal problems and promote the success of your business.

At Ball & Barry Law, we've helped countless entrepreneurs start new businesses of all types and sizes. Call us today at (720) 439-2530 or contact us online to learn more about our services.


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