Avoid These 5 Legal Mistakes When Starting A Business

It isn’t uncommon for new business owners to make legal mistakes when starting their new ventures. This is because they are having to focus on so many things at one time. But, it is important to stay on top of everything involved with starting a business, including following the law.

A failure to write a proper partnership agreement

If you are partnering with someone to start a business, you MUST have an adequate agreement in place. Each partner must know what their roles are and what happens if they do not fulfill their duties. Here are just some of the things your partnership agreement should address.

• Ownership percentages
• Time investment expectations
• Clear roles and responsibilities
• Any assets that are being invested in the business
• Salaries
• What happens in the event a partner leaves, fails in their role, or passes away
• The sale of a portion or all of the business

A failure to use a basic contract with vendors and clients

Every business should have a base contract to use with clients and vendors. This can be used as a foundation or as the main contract, depending on your needs. A business lawyer can help you set your contracts up and get you started with a strong foundation. This will help you avoid litigation in the future.

Choosing the wrong legal structure

This usually comes down to tax issues. When starting a business, you have a variety of legal structures to choose from. They include limited partnerships, sole proprietorships, limited liability corporations, C corporations, S corporations, and many others. Choosing the right one will prevent tax issues in the future.

Not understanding ALL of the laws

Usually, business owners both new and seasoned understand federal laws, at least to a point. But, many fail to learn and follow state and local regulations. You must be prepared to adhere to all laws before you begin doing any business. Having an attorney to help can prevent you from making any mistakes when it comes to local and state laws.

Choosing a name without checking its availability

When you choose a name, you need to make sure it is actually available for use. Even if you have come up with one that you love, if it belongs to another business, you could face legal issues down the road. Here are some tips to help you choose your business’ name.

1. Pick something that stands out, but also reflects your business’ personality.
2. You can research on the internet, in magazines, and other publications within your industry.
3. Make a list of possible names to choose from. Then, do some trademark research to see what is available.
4. Check with the county clerk to make sure the name isn’t used as an assumed business name.
5. The way you register your name will vary. Be sure you know that your name is available BEFORE you begin the registration process.
6. Work with an experienced business lawyer. This will ensure that the entire process goes smoothly.
7. Working with an attorney to start your new business

The best way to ensure your business starts on the right foot is to work with a qualified professional. The Finance and Corporate attorneys at Brown & Fortunato are prepared to assist you with your business, at every stage. You can reach us at (833) 228-6300 or Send Us an Email for more information.