Running a business is a tricky endeavor. While you always want the best for your company, mistakes can still happen. In some cases, these business mistakes happen because of your own carelessness. Here are some of the common mistakes and ways to avoid them and their legal ramifications.
Making Deals without a Contract
Even if you trust the person you’re making a deal with, it is still important to put all your dealings in writing. This greatly reduces the chance of a subsequent dispute or misinterpretation, as both of the parties can refer back to the written agreement. Don’t just end a deal with a verbal agreement or a handshake; pursue a contract to protect you from loss of time and money, and lawsuits.
Choosing the Wrong Business Structure
The wrong choice of entity can put your business at risk and cost you more tax payments every year. Don’t choose a legal structure just because it’s easy to set-up. In most cases, business owners can form an LLC, as this shows banks and investors that you’re serious about your business. It also protects your personal assets in case your company is sued. Keep in mind that consulting a business lawyer is still important to help you with your decision.
Not Obtaining Trademarks or Copyrights
Before choosing a company name, logo, or trademark, do lots of research. This is to make sure that no other party is already using it. Failure to do so will only lead to legal issues, like trademark infringement complaints. Getting a copyright, on the other hand, is important to help you protect your business from piracy.
Bringing in Partners Without an Agreement
Whether your business partner is a family member or a long-time friend, you still need a binding agreement. This specifies you and your partner’s responsibilities, along with what would happen if you have opposing views on where to take the company. A detailed agreement also helps in the allocation of profits and losses, and in resolving disputes.
Keep an eye on these mistakes to avoid liabilities that could threaten your business. Take the right steps and always do your research before making a major decision. It is also advisable to hire an experienced business attorney to have timely guidance as your business grows.