You have decided to take the leap and start a business. Beginning a new venture is thrilling, but it can also be daunting. There is a certain amount of risk involved, some of which you can avoid by building in legal protections. Our law firm offers strategic business and executive coaching. We can help you create a solid foundation and avoid common legal mistakes when starting a business.
Common Mistakes…
Starting your business on the wrong foot could come to haunt you for years to come. Some of the most common mistakes founders make are:
- Not doing enough research
- Failing to get necessary licenses ahead of time
- Leaving themselves exposed to liability
- Not planning around foreseeable expenses
…And How to Avoid Them
So, how do you avoid making these common mistakes? By taking the following steps ahead of time.
Start With a Plan
You have an idea for a business, and you want to hit the ground running. But starting without a solid business plan can be a crucial mistake. A business plan is your blueprint for success. It provides you with direction on how to start and grow your organization. It can also help you outline a clear vision when pitching your business to investors.
Start with a solid business plan that addresses everything from your marketing strategy to your financial projections.
Ensure You Have the Proper Licenses, Permits, and Registrations
Register your business with the proper federal, state, or local authorities and obtain the necessary licenses and permits required to operate. If you fail to do so, you could be forced to close, pay significant fines, or face legal repercussions.
Protect Your Business With Insurance
Business insurance is essential. Without insurance, you could risk losing everything if you suffer damage to your commercial property or inventory because of a fire, natural disaster, or other unforeseen event. Most businesses will need the following types of coverage:
- Commercial property insurance
- Product liability insurance
- Business interruption insurance
- General liability insurance
Protect Your Intellectual Property
Your business’s brand is its identity and should be protected. You should legally safeguard logos, domain names, web designs, social media handles, slogans, and other intellectual property. The following tips can help you protect your brand:
- Conduct IP searches before investing in your brand to ensure you are not infringing on an existing business, which could result in legal action against you and your enterprise.
- Register your domain name.
- Trademark and copyright all eligible intellectual property.
- Use the same social media handle across all platforms for consistency and to shield against imposters.
- Develop a system for monitoring for potential infringements on your brand.
- Be prepared to take legal action to protect your brand when necessary.
Separate Your Personal Finances From Your Business
You should not mix your business’s finances with your personal finances. Keeping things separate promotes transparency in accounting. Separating your business from your private accounts can also protect your personal assets if someone sues your business.
Prepare for Tax Obligations
Businesses have different tax obligations than individuals. You need to understand what federal and state taxes your business will owe and make a plan for payment. Failing to do so could result in penalties. Generally, businesses are required to pay income taxes, employment taxes, and excise taxes.
Have Clear, Written Contracts
Clear, written contracts with partners, employees, suppliers, and clients are vital. Without contracts, disagreements can lead to costly and time-consuming legal action. Do not rely on online legal templates. Use well-drafted contracts that outline your specific terms and expectations.
Do Not Underestimate the Importance of Seeking Legal Advice
While you do not have to hire a lawyer to help start your business, having experienced legal guidance can help you avoid expensive legal pitfalls you may encounter down the line. Hubbs Law assists clients in Texas with a wide range of business law needs. We want to help you achieve your goals and get your business off to a strong start. Let us assist with identifying and assessing your risks and making a plan to meet them head-on. Contact us online or call today for a consultation.