Getting your startup business on its feet can be very hectic. There is a lot to be done and so little time. In the entire hassle surrounding setting up a startup business, many entrepreneurs often overlook the legal requirements that need to be in place in a startup. Unfortunately, such seemingly minor conditions can lead to costly consequences. There is no telling how much trouble a little negligence can cause your business venture, from huge financial losses to heavy legal penalties.
Some of the Common Mistakes Business Owners Make
Here are some of the legal pitfalls to avoid in your startup business to ensure its success.
1. Unclear Deals Between Cofounders
If your business has more than one founder, it is imperative to have a written contract detailing all the cofounders’ dealings. This includes all the cofounders’ salaries, the time commitment required from all the founders, and the procedure to be followed if one of the founders wants to give up their business share.
2. Not Properly Establishing Your Startup
When setting up your business, you will find it beneficial to register it as a limited liability company right from the very start. It will also be best to separate the business assets from personal ones to avoid any ramifications from combining them.
3. Not Documenting All Relevant Information
Any business deals you make with customers, cofounders, associates, or staff should be documented in detail. Informal agreements are one of the most rampant causes of misunderstandings and legal issues in companies. Having a written and signed contract of all involved parties in an agreement can save your company a great deal of legal trouble. It will also promote smooth running and productivity within your business.
4. Late Filing of Taxes
One of the most grievous mistakes a business owner can commit is the late filing of their taxes or failing to file them at all. This will put you in bad books with the law and may lead to fines. Lack of tax payment or fraudulent tax payment may land you in jail. It is therefore prudent to uphold utmost integrity when it comes to filing your taxes.
5. Not Protecting Your Intellectual Property
When starting up your business, make sure you protect all your intellectual property. For example, this applies to all the content on your website, as well as your patents, copyrights, and trademarks. If you do not protect your intellectual property as soon as you can, other businesses may come up and claim them as their own. Using them after this may land you into huge trouble. It will also derail your business, especially if you have already established a customer base.
6. Lack of Legal Counsel
Business owners often underestimate the importance of legal counsel in their businesses. Most of them make the grave mistake of venturing into their startups without having a qualified legal expert on their teams. You do not want to make this mistake. Having a seasoned business lawyer will help you navigate all the legal issues required without much headache.
What to Do in Case You Land into Legal Trouble
Depending on the magnitude of your breach, your company may lose vast sums of money in fines. In worse cases, you may end up facing white-collar crime charges such as tax fraud. Such accusations could taint your reputation and have dire consequences on your startup. When faced with such charges, do not fight them alone. A defense lawyer from Chris Lewis & Associates can help clear your name and guide you in maneuvering such hurdles as you focus on taking your business to greater heights.