Starting a new business is exhilarating. Most people have the charisma to see their thoughts expand. But, occasionally, that enthusiasm creates some regret because of big legal breakdowns.
Here, you will find people’s top legal missteps when launching a business. The good news is you don’t have to repeat these common mistakes. It also pays and can be a significant saver to seek the services of competent Phoenix business law attorneys who will advise and represent you.
- Not Setting Up a Business Entity
Most smaller enterprises begin the fledgling stages of their operations without ever establishing an actual business form. This means the owner loses some of their assets should there be a lawsuit or a debt to pay. Your assets cannot be protected if you do not have a business entity. For instance, if your enterprise has borrowed funds from anyone, they can seize personal property to recover the amount. Speak to a lawyer about forming a business as an LLC or a corporation.
- Skipping a Shareholders’ Agreement
There should be a shareholder agreement every time there are shareholders in the business. This agreement describes what happens if one owner wishes to exit the business, sell their stake, or die. Without a venture, the owners there can disagree on the split. This can be contentious and, in worst scenarios, culminate in court cases when the two parties have seriously disagreed! In particular, asking a lawyer to draw the shareholders’ agreement is important.
- No Clear Employment Agreements
On other occasions, companies may have what can be referred to as no-set employment relations. It does not matter if the business is large or not. These agreements should be made. Lack of structure sends out messages regarding roles, compensation, and workers’ rights to specific projects. For instance, an employee may develop the impression that he or she owns a particular project he or she has worked on.
- Ignoring Privacy Policies and Terms of Service
You will need a privacy policy if you have any kind of online business. You also need terms of service. These tell customers how you use their data. Without these, you could be sued or fined. Your site might even be shut down. For example, you may get in trouble for not sharing your data rules if there’s a data leak. Ask a lawyer to make these documents for you. Make sure they follow the law.
- Misclassifying Workers
Some businesses call employees “dependent contractors.” They do this to save money. But this can lead to legal trouble. If you misclassify workers, you could be fined. For example, if a worker is hurt, you might have to pay their bills. Know the difference between an employee and an independent contractor. A lawyer can help you classify them right.
- Ignoring Local and International Rules
If you serve customers in different places, know each place has rules. Even small mistakes can lead to fines or shutdowns. For example, missing a local tax rule might make you pause business. Learn the rules of each place you serve. A lawyer can help you stay updated, especially for international rules.
- Not Protecting Your Intellectual Property
Some small businesses think they have no intellectual property (IP) to protect. However, ignoring IP can lead to problems. If you don’t protect your ideas, someone else might take them. For example, an employee could claim something they created for your business. Learn IP basics. Get trademarks, copyrights, or patents to protect your work. An IP lawyer can help.
Conclusion
Starting a business safely saves you from future trouble. By avoiding these mistakes, you have a better chance at success. Have you made these mistakes? Don’t worry; we can help. Contact us today for a free consultation to get back on track.
