Good question – I can touch on the legal mistakes I commonly see.
- Forming your company on a whim. A lot of business owners will pick the business entity that is easiest to set up, rather than the entity that is most appropriate for your needs and vision. The same goes for which state you set up shop in as well.
- Not protecting its intellectual property (IP). Simply put, IP is valuable. If applicable, you should acquire patents, trademarks, and copyright for your business. Also, it’s important to have a confidentiality agreement available from the very beginning. Things like an IP assignment agreements and a non-compete agreement should be considered as well.
- Moving too fast. You should create a detailed business plan, and operating agreement (if applicable). What startups fail to realize that all the mundane administrative stuff in the beginning serves as a foundation for the company’s future successes. If you complete the preliminary tasks in a shoddy manner you’ll be paying for it years down the line. No one likes a big cleanup project – besides lawyers (:
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