Starting a new business that you hope to see thrive is an exciting venture. However, if you’re unsure of the right steps to follow in the startup stage, you could find yourself dealing with legal repercussions from mistakes made when getting started.
It’s important to do due diligence in research following informative resources made available to companies such as Kwote Advisor before diving into business. This source can also provide legal guidance from consequences following common mistakes.
Let’s review some of the most common legal mistakes new business entrepreneurs makes.
Common Mistakes New Entrepreneurs Make
While starting a business is thrilling, it comes with its share of challenges. Business owners must manage a staff, market the company, strive for positive customer support and on. Often overlooked are the legal aspects of operating the business.
This can lead to common mistakes that result in unfortunate repercussions including being sued by a client or facing penalties and fines. Let’s review 7 common legal mistakes new entrepreneurs want to try to avoid when getting their business of the ground.
A Business Entity
A common small business legal mistake is starting a company as a sole proprietor. This is usually reserved for freelancers but other types of businesses must create an entity to ensure business liabilities and personal assets remain separate.
Without an entity, when a problem arises and a client decides to sue the business, your personal assets are at risk. If you establish an LLC, only those assets are liable.
In the same vein, many tax incentives are available to those who develop an entity. These savings make forming an entity an attractive pursuit. Visit – Council Post: 7 Key Lessons For Entrepreneurs: Avoiding Common Startup Mistakes – for lessons for entrepreneurs avoiding common startup mistakes.
Intellectual Property
Protecting intellectual property whether a brand logo, a trademark, or a patent is essential and should be prioritized. This is a common legal mistake that can hurt a business leader over time.
A small business lawyer can be extremely helpful in registering trademarks or filing patents since they specialize in these areas. Refrain from hiring a business lawyer without these specialties.
Comparably, many entrepreneurs neglect their content in ads, on their website, or in marketing strategies. This is another legal mistake business leaders make. You want optimized and copyrighted material so that competition can’t use it for their own purposes.
It can be ugly when the competitors steal content and have it copyrighted before you do.
Comprehensive Employee Contract
Business leaders lean toward hiring the high-quality candidates for their roles but to attract and retain top talent you must present new applicants with comprehensive employee contracts.
These must include reasonable rules and expectations for staff such as whether employees will be hired “at will.” This means they can be fired at any moment without legal ramifications.
You want to include your performance expectations and let staff know what federal and state regulations you must comply with.
This includes providing workers’ compensation liability insurance. If you don’t have adequate coverage, you can be fined by the state and be held liable for damages when staff is hurt on the job.
Proper Legal Contracts
Whether dealing with partners or clients, you need legal contracts that are written to protect your company and clarify the roles, relationship, and responsibility between the parties to present a viable case if an incident arises.
Getting a legal contract is relatively simple, helping to avoid this common mistake. It’s still wise to work with a business lawyer particularly in complex situations to ensure these are well structured.
Health And Safety Laws
Health and safety laws must be adhered to when legally operating a business. Staff must be provided an environment that’s safe. Each city and state is unique in their requirements so you’ll need to research your local area and specific industry.
You want to go through a risk assessor and consult with a business attorney and insurer to ensure everything is in line.
Privacy Policy / Terms Of Use Agreement
Websites must have terms of use agreements and privacy policies. If you were to sell your client’s details but don’t have a privacy policy that explains this, you can expect penalties.
The terms of use agreement set the premise for how the site will be used. If someone uses your platform to break the law, your liability will be limited. Read here for mistakes to avoid when starting a business.
The Financial Property
For those who offer stock options to staff, you’ll need the proper legal structure, a clear legal outline of how staff will be compensated.
When filing taxes, you must take legal deductions and follow the laws when managing payroll. The financial management of a company comes with a host of legal matters.
It can be complex and intricate so you want to collaborate with business tax and legal professionals to help with the processes.
