Most people dream of starting a business and ponder over countless entrepreneurial ideas. However, only a few act upon this desire with some becoming successful entrepreneurs. If you have overcome the common fears and you’re ready to start, you need to learn as much as you can about your industry. More importantly, you have to research the threats to your new venture. Many startups fail and you don’t want to become part of these statistics.
This post explores common legal mistakes many new businesses make to help you steer your venture.
Failure To Consult a Legal Professional
After harboring your investment idea for months or years, you’re raring to go. Most first time investors exhibit unbridled enthusiasm and don’t take time to consult. If you don’t consult an experienced attorney such as Jacob A. Kupp, there’s a big risk your business will face headways within no time.
These legal experts guide you through the business set up, organization structure, shareholding, company registration, licensing, and so much more. A business is a legal entity and if you have no background in law, there’s a big risk of making the wrong decisions.
Failure to Create an Ownership Structure
Many new businesses are partnerships with different investors bringing in expertise and resources. These might be your friends or even family. At the beginning, everything might work smoothly even with no ownership structure. However, you’ll experience challenges the moment the business records losses or profits. A lawyer plays a critical role in setting up a strong structure with defined roles and responsibilities.
Failure to Incorporate Your Business
As you set up the business, it might look like the simplest structure is the best. After all, you might not envisage rapid growth in months. As you settle down, you might realize the need to bring in more investors and expand other aspects of the business.
A business lawyer would advise you to incorporate your company right from the beginning. This makes your business a separate entity and protects you from your company’s liabilities. An incorporated business can also access credit easily and also has a professional image. Your lawyer presents the options available for incorporation and guides you through the process.
Failure to Understand Legal Requirements
The government has a big say in how any business runs and it’s always important to learn more about the rules and regulations before you invest. Whether you want to set up a dental practice, or a recycling plant in your city, there are strict laws that guide businesses in every industry. Failure to comply with such laws can lead to hefty fines, jail term, and loss of reputation.
Overlooking Data/Privacy Laws
Data is the most invaluable asset for any business today. You need to manage any data in your possession in line with the latest data regulations. Loss of data through breaches or any other cause can lead to financial losses, hefty fines, lawsuits, and other debilitating consequences.
Planning to set up a new business? Don’t overlook the importance of legal advisory. This might make a huge difference and protect your investment from collapse or other legal problems.