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What Considerations Should Entrepreneurs Make When Starting a Business?
Entrepreneurship is dynamic, and when entrepreneurs get a business opportunity, they need to move quickly to take advantage of it and leverage it before competitors take over. However, it can be weeks or months before the business takes off, as the formation process can be stressful and lengthy. Even with careful planning, business lawyers in Central Florida say that entrepreneurs can unknowingly make mistakes that can present legal challenges later on.
If you’re forming a business, it would help to have a checklist of the things to do within the legal framework. It would also help to work closely with a legal team to create a plan. A well-detailed plan can help you avoid the following legal mistakes that could adversely affect your business:
Failing to Choose the Right Business Structure
Many entrepreneurs operate as sole proprietors, not realizing the financial risk this puts them into. Running your entity under this business structure can expose your personal assets, such as bank accounts and real estate, to business liabilities. You can also be held personally liable for lawsuits or legal obligations meant for the business.
Central Florida business formation attorneys recommend avoiding this mistake by evaluating the various business structures. Each has pros and cons and is affected differently by liability protection laws and taxes. Your legal team can help you choose a structure depending on your growth and expansion plans.
Not Registering the Business or Brand
Your business name, brand, and logo help identify your business from competitors. They help you generate goodwill, which increases your business value and reputation. Business lawyers recommend registering a trademark to protect your branding and goodwill.
Registering a business minimizes the risk of other entities within your industry riding on your success. Failure to take this step early in the business formation stages may force you to rebrand later and register a trademark to protect the new brand.
Not Separating Personal and Business Accounts
Business formation lawyers in Central Florida note that many aspiring business owners may choose the right business structures that protect them from personal liability, such as Limited Liability Companies (LLCs). However, they forget to separate their personal and business finances, leaving their personal income at risk if the business gets into debt.
Creating a business account dedicated to the entity’s financial transactions is crucial to minimize the risk of being held financially accountable for the business’s debts. Using your personal bank account or credit cards to conduct business transactions could affect you later within the legal framework.
Not Having Written Contracts
While verbal business agreements are acceptable, they may not be enforceable and may not legally protect you if a dispute arises. You may not have legal recourse if a business partner fails to fulfill their obligations or a client refuses to pay. Written contracts are crucial as they protect you by clearly outlining the consequences of a breach.
Skilled business formation lawyers in Central Florida can help you create written agreements for your business in various situations, such as hiring new employees or contractors, selling a product, or collaborating with new partners. They can review the agreements to ensure they capture key clauses and don’t have errors that could invalidate them in a court of law.
Not Keeping Up with Legal Compliance Issues
Entrepreneurs must familiarize themselves with legal compliance issues that can affect their businesses if not well established. With the help of experienced business attorneys in Central Florida, check that your business is compliant in the following areas:
- Intellectual Property (IP) protection: Intellectual property includes intangible business assets like copyrights and trademarks that indicate the originality of your business ideas or products. Ensure you know the form of IP that best fits your industry and how to register it to prevent competitors from copying it.
- Labor laws: The law holds you to specific standards when hiring employees, including providing a safe working environment, ensuring the contracts adhere to a particular legal framework, and providing competitive remuneration.
- Health and safety regulations: Your business must adhere to your industry’s health and safety regulations. Ensure your employees familiarize themselves with these laws and take steps to provide the necessary protections. For example, conduct regular risk assessments and dispose of hazardous materials appropriately.
- Insurance: Your business, whether small or big, should understand its obligations in relation to insurance as it protects the face of misfortunes. Depending on your business type, you may need different policy types, such as professional indemnity coverage, liability insurance, or workers’ compensation, for optimal coverage.
- Advertising laws: When advertising your business or products, you must adhere to advertising regulations, such as verifying the claims don’t mislead the public. You also must include necessary disclaimers or disclosures in advertising material to protect your business from expensive lawsuits if regulations are violated.
A Skilled Business Lawyer Guiding You to Avoid Legal Mistakes During Business Formation
Business formation is an exciting yet complex process. Without proper legal guidance, you may overlook crucial issues that may later be the basis of the downfall of your business. Central Florida business formation lawyers can work with you, providing legal insights to ensure your start-up complies with the state’s legal framework.
The Lankford Law Firm hosts knowledgeable lawyers dedicated to helping businesses start on the right footing. We can assess your business needs and advise you on the crucial legal issues you shouldn’t overlook. Our team also helps entities needing business law advice or legal representation. Call us at 850-888-8992 for a consultation.
