Protect your business and your personal assets by reviewing this top 10 list of legal mistakes made by many entrepreneurs.Starting a business is hard. There are hundreds of issues to consider, and often the legal ramifications of your actions can close your business before it is even open.
Not incorporating right away – most attorneys recommend that you set up your Corporation or create an LLC as the very 1st step of any business venture. Problems can often occur when individuals who consider themselves partners at the onset, and to leave the venture, come back when the company is prospering in demand there share. If this company had incorporated and clearly issued shares to all founding partners, this issue would have been avoided entirely.
Hiring a non-entrepreneurial lawyer – the landscape of business startups is very different than other types of legal services. Don’t hire a real estate lawyer to set up your venture capitalists contracts unless you are planning for trouble ahead. It is worth the time and expense to find a specialist to do the deal right the 1st time.
Setting up an LLC without proper research – many new business owners automatically create an LLC or limited liability corporation without properly determining if it is the correct legal structure for their particular situation. Depending upon the type of business, industry, whether you’re selling a product or service, a corporation either S type or C type might be more appropriate and helpful for your new business venture.
No standard contract on hand – every business, especially new businesses, should have a standard contract template on hand to use at the ready. This contract should have been prepared and approved by a competent business attorney and should be the advantage of your business.
Favoring family and friends with company stock – of course, you love your family and want to give them the best, but be sure not to show favoritism when issuing stock, lest you run into federal and state securities laws. These rules require that shares sales must comply with disclosure and filing requirements. To avoid fines and penalties hire knowledgeable lawyers to document all share. Sales to be in compliance with the law.
Sloppy employment documentation – new ventures are often moving so fast and furious hiring new people that they neglect to repair the proper documentation that must be signed by all employees. These documents often include stock options, stock incentive plans, notice of stock options grant, and option agreements. In some particular cases, there will also be confidentiality agreements, and invention assignment’s to be executed.
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About Me:
Marsha Kelly Business Blogger - Serial entrepreneur, after doing Time in corporate America, who has learned about what products and services really work well in business today. You can learn from my experience and my associates as we shop from the internet for tools, supplies and information to build our businesses and improve the lives of our family and ourselves on our site http://best4businesses.com/
My strongest belief is that the safest, most secure and most lucrative job you can have is owning your own business. I learned this valuable lesson the hard way by investing time, energy and emotion into a corporate career only to be fired unceremoniously -when I dared think creatively outside the box. My entrepreneurial journey to starting my own business was first by necessity but then turned into a great blessing of prosperity and freedom. Graduating from the school of business hard knocks and learning how to start, manage, and then sell my business for over $1,000,000. Learned more about real life business this way that I learned in my four years at the NYU School of Business.