7 Legal Issues Involved in Starting a Student Business

Starting a student 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!

1. Entities

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;
• C-corporation;
• General and limited partnership;
• S-corporation;
• 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.

4. Mastering Bookkeeping for Student Businesses

Starting a student business involves tackling legal requirements, including bookkeeping. Many young entrepreneurs struggle with this crucial aspect, unaware of its significance. Yet, maintaining proper records is mandatory to avoid complications with local tax authorities.

To address this challenge effectively, consider two viable solutions. Firstly, hiring an experienced bookkeeper simplifies the process, ensuring compliance and accuracy in financial matters. Alternatively, if budget constraints are a concern, managing bookkeeping independently is feasible. To streamline this task, leverage advanced bookkeeping tools and systems designed for efficiency.

By opting for professional assistance or utilizing user-friendly tools, you can navigate the complexities of bookkeeping confidently. This proactive approach not only ensures compliance but also enhances the overall management of your student enterprise.

5. Taxes

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.

Privacy Policies

Lastly, one more challenge you have to overcome before starting your student business is establishing a sound privacy policy. Though it is one of the most important legal things for every business, young entrepreneurs often overlook it.

Every country (as well as every state) has a certain set of privacy laws that protect users and customers from the unlawful collection, storage, and handling of their personal data. For a startup, violating these laws can result in hefty fines and even criminal liability. So, establishing a lawful privacy policy at an early stage of developing the business will definitely help you sleep easier at night.

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