Starting a new venture is an exciting event for every budding entrepreneur. But they also encounter a lot of obstacles when it comes to starting a company from scratch. For example, Startup cost is the most common hurdle that every entrepreneurs face and one should know that there are SME loans. A business loan can take care of all such costs that you might encounter when getting your business up and running. However, there is no tried and true formula for how much time and money should be spent on legal concerns early on in the life of your business. But with the help of a business loan, you will be able to manage all such legal expenses.
Starting a business can be so exciting that sometimes you forget to consider some basic first steps. It’s best to make sure you take a moment to think about protecting your company in the long term. Let’s take a look at some of the precautions every start up business should take to avoid falling in traps.
- Keep Good Counsel.
It’s astonishing that almost half of the small businesses have never consulted with a lawyer. A good legal counsel is essential and can certainly be a competitive advantage for business owners who have to manage both opportunities and potential risks. With the right legal representation, the legality of your business is something every owner has the power to do.
- Failure to incorporate.
By choosing to incorporate, your company becomes a separate legal entity that conducts business, generates incomes, and assumes its own tax and legal liabilities. Another common mistake is to choose the wrong business entity once you decide to incorporate it. There are various business entities to choose from, such as C corporation, S corporation, LLC, and nonprofit. You should consider speaking to both an attorney and a tax advisor to get to know what’s best for you.
- Not protecting your intellectual property.
A trademark is a symbol that distinguishes and identifies your startup’s product. You can acquire trademark rights through the consistent use of a mark even if the trademark is not registered. There are four types of intellectual property: trademarks, patents, trade secrets, and copyright. Ask anyone who has access to your proprietary knowledge to sign a non-compete agreement and non-disclosure contract before you reveal anything.
- Not following employment best practices.
When hiring employees, don’t forget to have them sign an employment agreement, where you can clearly display your employees’ responsibilities, rights, and obligations. Employees usually know a lot about your company, so take steps to keep confidential information safe. Make sure your employees and independent contractors sign a Non-disclosure agreement when joining.
- Not getting agreements in writing.
It’s best to get your agreements in writing because skipping this step can have significant consequences. Whenever there’s an agreement of any kind, you should write down a contract and get all of the parties to sign it. This will ensure that everyone is on the same page, and you also have a written record of the agreement. Such written agreements protect everyone involved and save you thousands of dollars in legal expenses and losses at a later date if ever a dispute comes up.
When you’re in the hardship of startup, it’s all too easy to make one of the mistakes. So, it’s always a good idea to make sure you’ve taken care of the basics. You can consider these steps, and you’ll be well on your way.
