Major Legal Mistakes that a Lot of Start-ups Make
If you want to make sure that you avoid making costly legal mistakes, then this is the guide for you. Here you will find out what mistakes people make while also being able to protect your business for the future.
Choosing the Wrong Legal Entity
Choosing the right legal entity from the get-go is crucial if you want your company to succeed. Some structures include a registered company, LLP or association. If you are not quite sure which company formation you need to choose, then it is a good idea for you to choose an LLC if possible. If you go for this option, then you will soon find that you are able to avoid accepting personal responsibility for any losses that are made. If you go for this then you may be able to avoid paying higher taxes too, and this is always a good thing.
Not Tracking Expenses
Another mistake that a lot of start-ups make is that they do not track their expenses. It doesn’t matter whether they are small or large because they absolutely will occur throughout the year. Many start-ups try and collect all of their receipts, but only when they need to file their taxes. If you do this then you probably won’t be saving as much as you could when it comes to your taxes and this is the last thing that you need. There are many options available if you want to track your expenses, so keep this in mind if you want to avoid risk.
Not Having Enough Documentation
Every interaction, whether it’s meeting someone or anything else, has to be documented. Legal due diligence can easily make or break your business. If you do not have your documents in order, then you may find that you are not able to prove things when you need to, and this is the last thing that you need. If you want to protect yourself here, then you need to make sure that you have everything documented and backed up, so that if you do run into legal trouble, you have everything you need.
Not Having a Lawyer
If you do not have a lawyer for your business then this is in fact, a huge mistake. You have to make sure that you have a lawyer because if you don’t, then you may not be able to get the legal support you need when making business decisions. If you want to make sure that you have the right support, then go for a niche lawyer who is specialised in your industry. You may need a talented team of mining accident injury lawyers if you work in the construction or labour industry for example.
Not having a Proper Founder Agreement
Every start-up may not run well or be successful. For this reason, it’s important that you have a good founder’s agreement. When things take a turn for the better, or the worst, you need to make sure that everyone is on the same page in regards to the profit being made and who is going to run things if someone should split from the company.