Ownership Issues for a Startup Business

Various issues can always arise when starting a business, especially when ownership and responsibilities are not clearly laid out from the start.  When starting a business, it is crucial to discuss ownership, compensation, and responsibilities.  This can be challenging when a business is first forming and those roles are evolving as the business grows.

Clearly delineating percentages or shares of ownership can help if the business is dissolved or other issues arise.  When the business owns real or personal property, a clear delineation of rights can help to distribute the property accordingly in case of a dispute or dissolution of the business.  Challenges can also arise when that business involves intellectual property, which can range from patents, copyrights, and other business knowledge.  When a business is at the beginning stages of formation, it can be difficult to know who owns what portion of the business, including that intellectual property.  Disputes may arise later about ownership and financial interest in intellectual and tangible property, so it is best to be clear about the ownership from the start.

Another ownership issue that can arise with startup businesses is giving away too much of the ownership.  As you seek funding for your new business, you may be tempted to distribute shares of the company to investors and others involved in the formation of the business.  However, if not done carefully, this can lead to the loss of control of the business or other ownership disputes down the road.  It is crucial to seek the advice of an attorney before splitting the ownership of your business too many ways.

Don’t wait until an issue arises to clearly lay out ownership interests in your business.  If you need assistance, contact O’Keeffe O’Brien Lyson Foss in Fargo, North Dakota to discuss your case or call 701-235-8000 or 877-235-8002.

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