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Legal Mistakes Made by Entrepreneurs
By siliconindia
Fremont: Starting a business can be fraught with potential legal issues that are often overlooked by first-time entrepreneurs. These may look small in the initial stage which you think might be taken care of at later stage. But, it might turn to a hassle if not approached on time. So, what are the most common mistakes that startups make? We bring to you few such mistakes that you should not ignore as a startup.
Choosing the Wrong Business Structure
You choose any form of business, may be sole proprietorship or limited liability company; making a hasty choice can put your startup business at risk and lead to painful tax bills at the end of the year. Choose wisely, as registration of business needs to follow certain rules and that incurs cost.
Hiring a non-experienced Lawyer
Many VCs opt for those startups by their choice of legal counsel. Lawyers who do not have experience in terms of working with entrepreneurs and VCs focuses on wrong things and fails to recognize the more subtle potential traps. So, it is wise to hire someone who knows the rules and regulation of the game and has already played it.
Bringing a Partner without Agreement
A written document has more value than verbal agreements. Many startups tend to bring in new partners without making any agreement with them just to save time so that they can focus on business. But, this can prove crucial for the life of your own business in the future. No matter how much you trust your partner, it is better to keep an umbrella with you to protect from the rain. Do not forget to put all the relevant details of the operations and responsibilities that the new partner will hold in the business including the share which he will have in your business.
Putting a later date for Legal Issues
The first-time entrepreneurs think that they can sort out with hiring a lawyer at a later date, what they first need is to get funding and start running their business. A lawyer associated with you since the beginning of your company will know all the relevant details of the process through which you form your company and this will help him in the later date to provide you with better legal guidance.
