Legal counsel and documentation is a form of insurance for your business. Without proper legal protection, you are open to unnecessary liability. Take time early on to set your goals and concerns, and avoid the seven legal sins that we’ve identified through our experience working with small businesses in various industries.
1. Lack of planning. There is no single set of legal protections that are right for everyone. In general, you will want to protect your assets, document proof of your operations, establish a suitable tax structure, and ensure that your business can expand.
2. Not choosing a business model. Incorporation offers many benefits but is not for everyone. Before filing, think about your long-term strategy. Will your business cover only a limited project or period of time, or do you expect it to grow over the years? Research the different business structures and determine the entity that best matches your goals and abilities.
3. Failure to trademark. Check trademark registries for availability and claim your trademark once you’ve decided.
4. Losing control of your name. Register your domain name and claim your company’s name on blogs and social media sites such as Twitter and Facebook. Initially you may not have the time or resources to use these outlets but you’ll prevent competitors from grabbing them.
5. No protection. If your company is based around an invention, patent it to ensure your exclusive rights to use and profit from it. Incorporate and assign the necessary intellectual property and other assets to the corporation. Or you may be more interested in protecting your creation as a trade secret. An intellectual property lawyer can help you choose the best option for your purposes.
6. No proof. Corporate documentation can be critical if you are ever involved in a lawsuit. Keep regular corporate minutes to preserve the company’s limited liability status. In addition, the IRS requires that corporations save certain records.
7. Not asking for help. Listen to other entrepreneurs and consult with professionals, such as lawyers and accountants. Access credible sites on the internet that can give qualified, cost-effective advice. Expert help in the beginning will save you time and money down the line.
Founder and Chairman
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