A large number of startups make some common mistakes which can be avoided with just a little planning and minimum cost. Unfortunately, most businesses make these mistakes over and over again. This article is going to look at the top common mistakes that you are bound to make when starting a business. Although these mistakes are common, make sure you consult with a lawyer from your locality to help you point out how the issue is within your jurisdiction.
- Ignoring the Prime Directive
Starting a business follows a specific procedure. Businesses all over the world follow such a procedure, and it is always cheaper to handle a potential legal issue beforehand. For example, coming up with a contract when getting into any agreement, either with a supplier or contractor. Many business people know this for a fact, but tend to ignore it altogether.
- Failure to Protect Your Personal Assets
Most would-be business owners understand that they ought to form a limited liability or a corporation. Doing this helps protect your personal assets from different kinds of liability. Many startups ignore this fact and don’t maintain their business as a different legal entity, leading to legal issues in the future.
- Loose Sales Talk
Do you know that the sales language your employees use to sell to customers might put your business in trouble? The law regards this as a binding talk between the business and the customer. Your sales executives might make a lot of recommendations that will convince the buyer to make a purchase. You might have warranties for your products, but still the statements that your sales people make also become warranties. Seek the help of a business litigation expert to handle these legal issues.
- Failure to Protect Trade Secrets and other Confidential Information
You aren’t supposed to divulge any information that is deemed confidential to the business. This includes information that isn’t generally known, that is helping you make money in the business and that should be regarded as a business secret. Unfortunately, many businesses fail to do this. This is why you need to have a non-disclosure agreement between you and your employees or partners.
- Lack Of Organization
Being organized makes it easy to keep your documents properly organized. For instance, organizing your documents can lead to proper accounting procedures, which then lead to proper tax filing. Filing your taxes the right way lessens the chances of being audited. In case of auditing, your files will be found to be accessible and organized.
- Failure to Sign Up for Liability Insurance
Owning a business places you in a position where you are responsible for the welfare of others. These include your staff and your customers. You are also responsible for the people who use your products and services or who set foot in the business premises. With liability insurance, you are covered when something happens.
- Overlooking Contractual Provisions
A large number of businesses who are hungry for profits simply sign whatever contract terms are placed in front of them by the other person without reading through. Failure to understand some of the key terms included in the contract document can also affect the future of your business.
- Using Online Forms
Some businesses, with the aim of making things easier, go online and download presumably “professionally drafted” documents for various legal needs. Make sure to seek legal consent before using them as business documents. Remember, a single document cannot be universal, and can vary between each jurisdiction.
The legal aspect of any business is all about making sure you have followed the directives required by the state when opening a business. Failure to follow the directives leads to legal issues, which can affect the success of your business.