When you start a new business, there’s a lot you need to think about. From developing your business plan, pinpointing your offerings, marketing to your target audience, and hiring your staff, getting caught up in the daily details of running your business is easy. However, if you don’t take the time to set a solid legal foundation for your company, disputes get complicated quickly, and you risk the future of your business. Start your business on the right foot and avoid these legal mistakes new business owners make.
1.Picking the Wrong Business Structure
When you establish your business, you’ll likely pick a business entity based on its current operation while avoiding hefty registration fees and annual taxes. However, you may outgrow your business structure as it becomes more successful. Then, you may face more significant legal challenges and pay more taxes. That’s why choosing a business entity that allows you to grow your business for years to come is important. A few common types of business structures include:
- Sole proprietorship
- LLC
- Corporations
- S-Corps
- Partnerships
2.Skipping Business Contracts
Businesses are filled with different types of relationships, Whether it’s getting a deal for your point-of-sale system or a contractor that helps paint the building. When starting your business, it’s common to be more concerned about getting the job done than having a formal business contract for each transaction you undertake. However, this is a huge risk if there is a dispute over the services or products delivered. Every time you enter into a new relationship with someone or another business, you should have a contract to help define roles and expectations. You’ll need for your business contracts for partnerships, employees, vendors, independent contractors, and customers. You should also have a privacy policy, legal terms, and service agreements on your website. These contracts will solidify your working relationship with anyone who helps run your business. It’s essential to have an experienced business attorney like Thomas R. Peppler help you develop these contracts to ensure they’re legally binding and serve your business.
3.Not Protecting Business Assets
Protecting your business’ intellectual property, like trademarks, logos, patents, and copyrights, has never been more important. Don’t let another business profit from your ideas! Ensure your intellectual property is protected by filing for trademarks and copyrights as needed. If you don’t, you risk another business using a similar name, logo, or marketing materials and claim it as theirs. Along with trademarks and copyrights for your intellectual property, you should consider getting business insurance to protect the physical assets of your business. All of these steps are ways to make your business legally yours.
4. Misclassifying Employees
Another common mistake new business owners make is misclassifying employees. Many small businesses use independent contractors to help operate their businesses to save money and get highly skilled experts to provide services for particular areas of their business. However, treating an independent contractor like an employee can have legal consequences. Recently, the Department of Labor published its final ruling regarding employee classification. Businesses that don’t adhere to the DOL rule face substantial legal ramifications for taking advantage of contractors. Independent contractors are usually independent business owners who help manage specific tasks for a business, such as marketing or accounting. They have their own schedules, work with multiple companies, and set their own rates. On the other hand, traditional employees work for one business as their sole source of income, and a boss dictates how the employee spends their time while on the job.
5. Not Consulting a Lawyer
The biggest legal mistake a business owner can make is not consulting a lawyer when establishing and maintaining your business. While you may have other people as part of your business team who may offer unofficial legal advice, it’s best to contact a licensed lawyer experienced in business law to ensure your business starts on the right foot and is structured to face any challenges that may come your way. A lawyer will help you draft the vast amount of legal contracts you need to use in your business, help you pick the right entity, and set your business up for success when challenges arise.
Peppler Law, P.A. – Business Lawyer in Orlando, FL
Ensure your business has a solid foundation by utilizing the experienced legal team at Peppler Law, P.A., to ensure all aspects of your business are set up for long-term growth. In addition to contract creation and business entity selection, our team can help with annual reporting requirements for corporations. Contact us today to get started.
