Avoid These 5 Start-up Legal Mistakes
It looks like every day, a new start-up is trying to make it big with a game-changing idea. However, only the ones that can turn that idea into reality reach business success. Too many start-ups fail to make the transition between idea and execution. Often they experience major setbacks along the way and eventually give up. In the midst of growing YOUR start-up, don’t make the common mistakes of disregarding tedious, but vital tasks as making sure all your legal, insurance, financial, and tax ducks are in a row.
Establishing your solid legal system changes everything. Many entrepreneurs struggle with developing systems because they don’t foresee the most common mistakes start-ups make. Foresight is everything. Avoiding these only takes a small amount of awareness and a bit of planning. Read on to see the top five mistakes new business owners make and how to avoid them.
- New business owners are not always strategic when creating their own entity.
You need to think about your long-term goals and choose an entity that meets up with where you wish to go. Having a purpose behind your business is of utmost importance when starting a business. While you can always convert your entity, later on, doing it right the first time will save you time and money. When you talk with a lawyer about the best form of entity, make sure your lawyer doesn’t just suggest a one-size fit all solution, but actually understands the details of your business now and where you want to grow to in the future.
- New business owners are not always clear with co-founders.
When starting a business, you want to discuss the worth of each founder. You don’t want to wait until profit is made to have this discussion. Confront the elephant in the room clearly and right off the bat. A well-drafted operating agreement or shareholder agreement is key here. The agreement process itself can surface potential conflicts in advance, and confirm whether you and your co-founders are truly in alignment before big investments of time and money are made.
- New business owners do not always guard their intellectual property.
It is essential to establish ironclad protections for the intellectual property that impacts your business’s future value. Think further than patents and trademarks; consider having founders, employees and third-party developers sign intellectual property rights agreements so you retain the value they may create while working for you.
- New business owners do not develop a robust set of contract templates.
You will thank yourself later for establishing clear guidelines and minimizing your liabilities in writing. Online legal document drafting service is one size fits all; your business is best served by developing a set of templates that meet your business’s unique needs.
- New business owners overlook the importance of working with a lawyer.
Working with a trusted lawyer can help you avoid all the mistakes above plus countless others you will likely make as you grow your start-up. A lawyer who also works as a creative, strategic advisor, as we do, will guide you to not just avoid legal mistakes, but set your business up with the right legal, insurance, financial and tax systems for a lifetime of business success.
Just because you’re starting up a new business doesn’t mean you have to naive. If you are serious about developing a solid legal foundation for your start-up, begin by sitting down with us. As your Access Lawyer, we can help you identify your liabilities, mitigate any legal risks and get you on the right track for success. This will allow you the freedom and energy to focus on growing your business.
While being a successful business owner, you don’t want to get caught up in all of this legal mumbo-jumbo stuff! Lucky for you, we have created something called the Access Plan, which helps business owners protect their legacy. We can schedule a free Shatterproof Session to get you jump started!