Starting a business while being in college sounds like a cool idea. It will let you test your luck in the big game and, hopefully, give you a chance to gain a stable and high income. But, before you rush into it, you have to know about the problems waiting for you out there,
Being a student entrepreneur, you will inevitably run into a variety of issues. First of all, there will be a critical lack of time. Planning, launching, and running a business takes plenty of time. And so does studying. So, there is no way you will be able to start juggling all your responsibilities easily straight away.
At some point, you might feel like you need some help to keep up good academic performance without giving up on your startup. That’s when you can benefit from using a professional coursework writing service like EssayPro that will take care of your assignments while you are busy. But, keep in mind that academic issues aren’t the only ones you will face.
In fact, the most serious problems you will encounter as a student entrepreneur will have not an academic but a legal nature. What are those? Read on to learn about the seven biggest legal problems facing student entrepreneurs!
Before you can get your business up and running, you will need to designate the proper entity. This is the first major problem that you will have to deal with.
The entity you designate will determine the structure of your startup, your taxes and liabilities, and your fundraising ability. Therefore, you have to make the right choice here.
Some of the options you have here include:
- Sole proprietorship;
- General and limited partnership;
- Limited liability company.
Most small businesses go with partnerships or sole proprietorships because such company structures require the least paperwork. However, feel free to ask for a consultation with a professional to understand which entity will suit you most. After making this decision, you will have to officially designate it through the secretary of state.
2. Licenses, Registrations, and Permits
Depending on the type of startup, its location, and needs, you might also need to acquire certain licenses, registrations, and permits.
Such licenses can come in a variety of shapes and kinds. So, be sure to research local legal requirements and determine your startup’s needs. Ideally, talk to your counsel in order to have a better idea of what you might need to comply with the local laws.
3. Founders Agreements
One common mistake made by fresh entrepreneurs is not getting all their agreements on paper. Needless to say that such an approach can lead to a whole range of legal problems in the future, especially when there are multiple founders who haven’t signed a proper shareholder agreement.
Thus, if you are not the only founder of your startup, be sure to create a sound founders agreement. By putting your agreements on paper, you can rest assured that everyone involved in your business understands their responsibilities and rights. This will protect you from many issues in the future.
Another legal issue involved in starting a student business is bookkeeping. Young entrepreneurs often don’t know how to handle this aspect of their enterprise right. But, the biggest problem is that you are required to do it. Otherwise, you can encounter plenty of problems with the local tax office.
How to overcome this challenge, you may wonder? Basically, there are two ways out of it. The easy way is to hire an experienced bookkeeper who will handle all related matters for you. However, if you don’t have money to pay a professional, you can also do everything on your own. To ease the struggle, use high-quality bookkeeping tools and systems.
While keeping records of all your business transactions can be tough, it is even tougher to ensure that you are paying taxes properly. So, this is one more issue you have to be aware of.
In order to make sure that you are handling taxes right, be sure to double-check the IRS requirements applicable to your startup. This will help you understand local tax laws better and avoid plenty of problems with back taxes, fines, and other matters.
6. Intellectual Proprietorship
Intellectual property (or just IP) plays a crucial role in many businesses. Chances are that your startup is not an exception. Yet, not many young entrepreneurs realize this. As a result, they often face tons of issues in protecting their IP later.
Intellectual property can include copyrights, patents, trade secrets, trademarks, etc. If your IP is not protected, you risk losing it. So, one more legal challenge you will have to deal with is filing all your patents and otherwise protecting your intellectual property.
The Bottom Line
Starting your own business is hard, especially while you are still a student – don’t trust anyone who tells you otherwise. Apart from obvious issues such as a lack of time and difficulty in balancing out your entrepreneurship and studying, there is a whole range of legal challenges that can have a destructive effect if you overlook them.
The good news is that now you know about some of the biggest challenges you will face on this path. And, since you know about them, you are better prepared for them.
Now, all you need to do is keep in mind everything you’ve learned from this article. If you are meticulous enough about starting a legitimate startup, you will get through it. So, don’t give up, and good luck!