When you are in the middle of creating a business, it can be hard to keep everything straight. There are lots of angles to consider, from getting funding to what type of marketing approach to take to what to even call the new company.
With all the activity, it can be easy to overlook some of the legal aspects of creating a business. Usually, when a legal issue is overlooked, they end up costing more down the road.
Here are a few common business mistakes to avoid when starting your company:
Not structuring correctly
Companies have several different options when it comes to structure. It’s good to know what’s best for your own business. There are tax implications and liabilities organization structures that don’t come with others. The right structure makes sure your business is protected and not unfairly taxed.
Not signing contracts with partners
Co-founding a business when it’s just two people in a garage is easy. When the company begins to grow, initial agreements are often left behind. This means the power structure of a business can quickly become confusing as different partners argue for their claim in the growing company.
This can be avoided by clear, concise contracts for all partners at the onset of a business. They help avoid any misunderstanding and will allow your company to thrive with clearly defined leadership.
Accidentally violating securities laws
If a company gets big enough, you may want to begin trading stock in the company. This comes with its own list of issues and complications. Depending on the state, regulations can be strict regarding the sale of business stock.
These are just a few of the issues a new business can face when it begins to expand.
They may seem like minor details at the beginning, but they can become major problems down the road. A business law attorney can advise on these and other legal issues when creating a business.