Establishing your business requires considerable work and acumen. It also requires that you avoid costly mistakes that can hurt your business. One of the areas where you ought to be careful is in legal matters affecting your business. You ought to know the common legal mistakes that can turn out lethal for your business, and understand how you can avoid making them. Let’s expound more on this.
<h2 Legal mistakes you should avoid in a startup
<h3 Choosing the wrong legal entity
One of the very first decisions that you must make is in what legal form to operate your business. Choosing the right legal entity for your business should be deeply informed by the type of business you wish to start. The reason being, different companies, are supported by various legal structures.
When you fail to choose the right legal form to operate your business, you are likely to attract many hurdles that will slow the growth of your business. You will be most likely to incur higher taxes, and also become subject to significant liabilities.
To avoid the legal mistake, you should choose the right legal entity that will suit you’re your startup from the following sampled options:
<ul
With the right kind of legal structure, you can be sure that you will avoid repercussions in the future.
<h3 Poor legal documentation
Many business owners fail to draw legal documents that suit them, and they end up having many liabilities to bear. Well, your business should use proper legal documents that protect you while dealing with customers, partners, and clients. That said, there are no single set of standard legal documentations that are universal for all businesses. You should, therefore, use the ones that are essential to your startup. As a rule of the thumb:
<ul
Tip:
It’s always better to have a lawyer handle your legal documentation, rather than doing it on your own.
<h3 Circumventing tax laws
Tax issues can bring down your startup. For example, you might find yourself in a situation where you have unfiled tax returns or you omitted crucial information when filing. That is likely to put you into hot soup with the authorities coming onto your neck. You may be slapped with a hefty penalty or, worse, face legal action for tax evasion charges. If you are in such a situation, then you should find a qualified tax evasion lawyer to help defend you against the charges. But you should try not to fall into such a legal situation in the first place. It is crucial to know these tax issues:
<ul
Avoiding tax issues will help you build a good relationship with your government and also financial lenders.
<h3 Lack of intellectual property protection
The logo, name, symbol, unique product, service, and technology are all part of intellectual property. To avoid infringement by third parties, which might lead to loss of your intellectual property, you should always protect them. You can do so by obtaining Copyright, patent, or even a trademark.
<h3 Final remarks
Starting and running a successful business requires that you know more than just business. It comes with many responsibilities, including legal matters you ought to keep an eye on. Legal mistakes can happen, but you should be careful to avoid them as they might destroy your business!
