Rocco E. Cozza • November 12, 2019

Best Legal Tips When Starting A Business

Starting a business can be an exhilarating affair. You’re finally putting your dreams to work and bringing them to reality, one step at a time.

The journey can also be daunting. Especially when there’s still a lot to do before the business can stand on its own feet. You have funding issues. You need to find and hire staff, get ideal office space and deal with a host of other issues.

But in all this doing, many forget that some of the most important things to take care of first in starting a business are the legal issues. Sadly, with 22.5% of businesses failing within the first year and a further 50% fail after four years, most never get a chance to correct this error until it’s too late.

According to a survey conducted by CB Insights, where they conducted a post-mortem on 101 failed startups, 8% of businesses failed because the founders did not appreciate the potential legal challenges they would face.

Although your startup idea may seem simple enough, the truth is it can enter a world of legal complexities that will ultimately shut it down. If you’re to give your business a fighting chance, you will need to pay attention to these tips for giving your startup a solid legal foundation.

#1: Work with a professional startup team

Every startup needs a mix of skills and professionals that will help nurture and position it for growth. When starting a business, that’s to be expected, since startup founders cannot possibly know everything. In fact, more than a third of founders have only a high-school diploma and just 9% have a degree in business.

Unfortunately, in a misguided effort to save on expenses, startups often try to figure it all out on their own or hire friends and family that will work at steep discounts.

If you’re doing this or thinking about it, stop right now. Going down that route will only starve you of experienced counsel that will help you avoid many costly problems later on. Amongst the important areas where you will need advice when starting a business are:

  • Real estate
  • Corporate, commercial and securities
  • Accounting and tax
  • Industry-specific technical aspects
  • The legal aspects of all these areas

Don’t assume that you can get by with just enough for now and see how it pans out later. Retain experts that will help you lay a solid foundation for your business.

#2: Draw up a founders’ agreement

When starting a business a startup, another crucial foundational step to take is to draw up a clear founder’s agreement. The agreement should clearly define the roles and responsibilities of the founding team, equity and vesting ownership as well as assignment of IP ownership.

Startups often overlook this stage either because they’re all caught up in the rush and excitement of starting a business or because they feel the friendship of the founders will preclude disagreement.

Nothing could be further from the truth. In the survey conducted by CB Insights, 13% of the 101 startups surveyed confessed that disharmony amongst founders was a fatal issue for them.

Drafting an agreement ensures that your friendship remains intact and that possible disputes can be anticipated and clearly dealt with beforehand.

#3: Find the best structure and set it up properly

Choosing your business structure will be one of the most important decisions you make. This is because it will determine what strategies and advantages will be open to your business and the obligations that the business will have.

Do you want to go with a sole proprietorship, a partnership (whether limited or unlimited), start an LLC or corporation? Although sole proprietorships are very popular amongst Americans when starting a business ( 4 out of 5 ), the liabilities involved may be crippling. A sole proprietor may be personally exposed if the business goes bust.

Limited partnerships and LLCs provide a bit more protection in this regard. You can limit the extent of your personal liability through an LP or keep the business separate from yourself with an LLC.

Whichever you settle on should be the product of considered thought, taking into consideration your plans for the business and your circumstances.

#4: Ensure you have the right licenses

Failing to satisfy all regulatory requirements from the start is a bit like building a sandcastle on the seashore. Regardless of whether you’re looking to cut corners on some licenses, or you failed to get them out of ignorance, the end result will be expensive for your business.

Businesses that operate without the required licenses may be open to hefty fines. Worse, however, is the damage your business may suffer by squandering your reputation with customers.

You should work with a trusted legal advisor who can keep you updated on all regulatory requirements as well as the changes you need to keep an eye on.

#5: Make your contracts written

Written contracts are an absolutely essential requirement for any dealings involving your business. You must develop a culture of having written contracts for employment, investments, dealings with contractors and everything in between.

You may think contracts unnecessarily complicate transactions but it’s always better to be safe than sorry. If you had to choose between an expensive legal battle because of unclear terms and having to read through the contractual fine print that covers all the bases, you’ll pick the fine print in a heartbeat.

Having written contracts sets out your business relationship clearly. It will also help you insert important clauses (such as NDAs and non-competes) that will protect your business and your interests.

An important point though is to avoid ‘standard agreements’ found online. While you may think you’re cutting costs, you may only be digging a bigger hole for your business than you expect. Your contracts should be tailored to fit the specific circumstances and requirements of your transaction. Dealing with a qualified corporate lawyer will save you much more than the cost of their services.

#6: Pay attention to your tax obligations

In a study conducted to understand why businesses fail, Statistic Brain found that incompetence, at 46%, was the most common reason for business failure. These businesses failed because they did too many things poorly, including paying attention to their tax obligations.

Once you have set up your business, you are required to be registered for taxes and file returns with payments of all applicable taxes on a regular basis. But this is one task that business owners are ill-equipped to handle.

Except you are a tax professional, you have no business trying to handle the tax liabilities of your business. This is a task that is best left for professionals who will not only help you put your books in order but also help you find ways to save money on your taxes.

Eventually, your business gains much more than it will cost you to keep a tax professional on retainer.

#7: Protect your intellectual property

With the increasing significance of the digital economy, intellectual property rights have never been more crucial to business success. If you want to secure funding, monetize your discoveries or have a shot at eventually selling your business for big bucks, IP rights are crucial.

Your business idea and its expression, your logo, unique designs, systems, and processes all form part of your business’ intellectual property. They contribute significantly to the value of your company and will eventually be the single factor most important to how your business makes money.

Huge brands like Coca-Cola, Google and Apple only became as big they are because they jealously protected their intellectual property. It will be vital for your business to also do so.

Draft clear agreements so your business IP will be protected in relation to the work of independent contracts, employees and even founders. Documents such as a deed of assignment or appropriately worded clauses in agreements will help ensure this protection.

#8: Find a good lawyer

Eventually, we cannot possibly exhaust all the legal issues you must keep an eye out for in this article. But you can access a never-ending stream of solid legal advice tailored to your specific circumstances when you find and retain a qualified business lawyer.

Regardless of what industry you function in, you will need a good lawyer to help guide you and ensure that your business is operating within applicable legal boundaries.

Even more important, having a competent corporate lawyer on your team will position your business properly to anticipate and swiftly take advantage of opportunities.

The Law Office of Rocco E. Cozza, PLLC has built up a reputation for providing a business-savvy approach to legal issues. We are not just content with providing legal advice; we are agile, efficient and creative lawyers that are keenly interested in helping your business grow.

To discuss your business needs or get our take on legal issues affecting your business, call us on 412-294-8444 or send us an email at rcozza@cozzalaw.com today.

Cozza Law Group Business Law Blog

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By Matthew Bolewitz • April 20, 2026
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How Business Litigation Protects Companies From Costly Disputes

By Rocco Cozza • April 19, 2026
How Business Litigation Protects Companies From Costly Disputes Although there are many costs involved in doing business, disputes can take a particularly high toll on a company's finances. These disputes might involve contract breaches, copyright violations, premises liability lawsuits, allegations of fraud, and much more. The obvious strategy is to avoid these disputes at all costs. How does business litigation fit into this equation? Can a company use business litigation to strategically protect itself from disputes? These are questions you might want to explore with an experienced business litigation lawyer in Pittsburgh . Business Litigation Strategies Are Often Preventive in Nature Many business litigation strategies are preventative in nature. In other words, companies take effective, early legal steps to eliminate the chances of disputes and legal action at a later date. One example of this is an effective business contract. When drafted properly, a business contract leaves little room for litigation or any other disputes. Many contracts contain arbitration or mediation clauses. These clauses force parties toward private negotiations instead of the courtroom floor. This private “alternative dispute resolution” (ADR) process is inherently cheaper, faster, and more private than litigation. Once a dispute reaches the courtroom, companies must pay much higher legal fees. They also face longer timelines. One of the biggest downsides of litigation for companies is its public nature. Many companies desperately need to keep sensitive information out of the public eye, whether that includes baseless allegations, copyrighted material, trade secrets, or more. Private negotiations can be so quick that they can hardly be called “disputes,” and issues may be resolved in a matter of weeks. In an ideal world, these disputes never even happen in the first place. A strong contract lays out clear responsibilities and privileges for each party, leaving little room for misinterpretation. Another obvious way to avoid business litigation is by choosing appropriate business partners. Another preventative business litigation strategy involves liability waivers. Although these waivers are not as effective as some company leaders assume, they can nonetheless prevent many needless or frivolous lawsuits. Liability waivers are not appropriate or possible in all industries, but they could be worth considering for businesses that welcome large numbers of patrons onto their premises. Business Litigation Strategies May Involve Regulatory Compliance Sometimes, the biggest legal threat to a business is not a partner or a customer, but rather the government. Regulatory compliance is an incredibly important business litigation strategy, and company leaders should consider consulting with lawyers who understand the specific regulations and laws that pertain to their industries. For example, a company that deals with industrial waste or chemicals may need to become highly familiar with the environmental laws. Generally speaking, these laws become more restrictive each year. Company leaders may need to keep a close eye on regulatory changes to ensure compliance. A company in another industry might deal with a substantial number of employees. If this is the case, the company might need to pay close attention to labor laws, discrimination laws, religious rights, and many other factors that can lead to employment lawsuits. Poaching is another issue that could be concerning, as are non-compete clauses. An experienced business litigation law firm may be able to help companies draft policies and contracts that drastically limit the number of employment-based legal issues in the future. For example, a company might have to follow strict guidelines if it wants to create enforceable non-compete clauses in Pennsylvania. Organized Corporate Governance Can Reduce Litigation and Disputes Many business disputes stem from poor, disorganized corporate governance. When the working relationship between shareholders, partners, and the executive suite begins to fall apart, disputes are inevitable. Effective shareholder agreements and organized record-keeping can go a long way in making sure everyone is on the same page. Business Litigation Attorneys Can Help With Risk Assessment Sometimes, dispute prevention starts with risk assessment. If company leaders become aware of a potential legal risk, they might consider a different approach or business strategy. For example, a company might consider entering into a new contract with a supplier. A business litigation attorney may be able to conduct effective legal research into the new supplier to determine the legal risk associated with a new contract. Perhaps the new supplier tends to get into lawsuits with its partners. Maybe the company is already in the process of being sued. Whatever the case may be, an experienced lawyer can help company leaders assess the legal risks associated with certain actions before moving forward. Most Disputes Never Reach the Trial Stage Since parties usually understand the downsides of going to trial, they tend to settle their disputes outside of court. This means that disputes rarely escalate into trials. However, this does not necessarily mean that a privately settled dispute is not costly for a company. Instead, a settlement could be disastrous for a company. This is why it makes sense to negotiate effectively, even if you’re dealing with someone who agrees to mediation or arbitration. Business litigation attorneys are often effective negotiators, and they can guide both parties toward mutually beneficial outcomes. If the goal is to reduce the cost of a dispute, a lawyer can push back with effective counterpoints and counteroffers. If the goal is to gain as large a settlement as possible, your lawyer can advocate on your behalf and reject lowball offers. Can a Business Litigation Lawyer in Pittsburgh Help My Company? Whether you are facing a dispute or you simply want to avoid the possibility of legal action in the future, a business litigation lawyer in Pittsburgh may be able to help. These lawyers can help your company take preventative steps, such as creating effective contracts or liability waivers. A business litigation attorney can also help you if your company is already facing a serious dispute or lawsuit. Consider reaching out to Cozza Law Group, PLLC, at (412) 790-2789 to learn more about your next potential steps. You can also find us online .