Starting a business can be exciting and scary for many people, particularly when it comes to the legal set up.
For many, the intersection of business and the legal system can be daunting, leaving them unsure of what questions to ask and important factors to consider.
Leaving out key factors when setting up a business can put a damper on its ability to profit or even its ability to stay afloat.
To assist potential new business owners in alleviating their worries, today’s post discusses 3 Legal Mistakes to Avoid When Starting a Business.
Failing to set up a business structure and plan
There are some situations in life where winging it is a sufficient strategy for getting by. Starting a business is not one of them, as there are many issues that need to be resolved long before the grand opening.
For example, before you ever open a physical or digital space, you need to decide what business structure you will use for your new entity. There are several options you can choose from, including
>limited liability company (LLC)
>limited liability partnership (LLP)
Along with deciding which structure is best for your business, you should also put together a basic business plan. This plan should address (1) the goals of the business, (2) how you plan to achieve those goals, and (3) who will help you achieve them.
Your business plan should also include a plan for securing the physical and intellectual property of the new business, by obtaining the necessary patents, trademarks, or copyrights to prevent anyone from stealing your ideas.
Regardless of what structure you feel works best or what your business plan entails, this beginning stage is the best time to meet with a business attorney who can guide you through the process and help you close any loopholes you may not have noticed.
Failing to set up human resources policies
One of the most exciting parts of starting a new business is putting together a team of people who will help make your business a success.
However, there are also important policies you need to put into place before building your team. For example,
>How will you pay your employees?
>What insurance will you have to cover injuries should they occur?
>When and how will you prepare for tax season?
>Are you required to provide health insurance to your employees?
>Will you have specific office policies that govern conduct, dress, and/or internet usage?
>Will your business have a vacation or paid time off policy?
Each of these questions, as well as many others, are important to consider before diving into the team building phase of a new business.
Mishandling your competition
No matter what area of business you plan to practice in, you are bound to run into competition along the way. How you handle and interact with that competition is vitally important.
Some business owners may believe that negatively talking about their competition, their products or services, is a good marketing or business strategy; however, any business which engages in such practices places itself on shaking legal ground.
Unfounded negative allegations against a business or person can be considered libel or slander, opening up the slanderer to legal jeopardy, fees, and a tarnished reputation.
A better strategy for business owners is to focus on what their business does best and promoting how their products or services can help potential customers or clients.
Note: A previous version of this post was published on our blog on 8/20/15. This post has been updated as of 8/7/19.
Do you need assistance in setting up your business or with a business matter?
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Disclaimer: Nothing in relation to the enclosed information should be construed and or considered as legal advice for any individual, entity, case, or situation. The following information is prepared for advertisement use only. The information is intended ONLY to be general and should not be relied upon for any specific situation. For legal advice on your specific situation, we encourage you to consult an attorney experienced in the area of Immigration Law.