Three Common Legal Mistakes That Startups Do

When launching a startup business, it’s not uncommon to encounter several legal and business challenges along the way. In a rush to get their businesses started, most companies often commit several mistakes, especially during their early stages. They tend to focus on too many things but the legal considerations of starting a business. When this happens, serious repercussions can happen.

The following are a few of the most common legal mistakes made by startup companies: big and small. These mistakes often happen during the initial stage of the business, especially in its early stages.

Not hiring a lawyer

Most solopreneurs and partnership firms overlook their legal obligations during their early stages. They mistakenly believe that they don’t have similar legal duties compared to much more prominent companies. However, having this kind of mindset can only cost you your entire business. So, it’s crucial to get a reputable business lawyer before your official launch. Please go through all the legal matters with him or her so you can set everything up correctly.

Selecting a business name with trademark concerns

Common Legal Mistakes in startups - Man shocked looking on a screen

When choosing a name for your company, it’s essential to do thorough research to ensure that you won’t have any trademark infringement issues or domain name challenges. You may be unknowingly infringing on another company name, which can confuse your customers in the future.

To avoid any domain or trademark issues, you can do a quick google search on the name so that you can check what other companies may be using a similar or identical name. You can also do your research on name registrars to see if it’s still available. If it is, then There’s a high chance that another company is already using the same name. Also, ensure that the name that you choose is memorable and unique.

Neglecting to follow the business tax laws

You need to know if your business is subject to sales taxes. It’s also important to know when to file your tax business income to avoid penalties. Keep in mind that tax can be complicated, no matter your business location. So, it’s best to hire an excellent business accountant or at least get an accounting software application to help you stay on top of your taxes. Doing so will also help you keep your records organized if ever you need it.

You’ll need to acquire a tax ID card coming directly from the IRS for your business. Both the founders and the company employees also need to consider whether they can relieve possible tax problems by an IRC section 83(b) preference. Also, it’s crucial to determine whether your company has tax incentives or not. Depending on the type of business, different tax incentives can be available, such as investment tax credits.

Running a business requires a lot of your time and effort to understand everything that goes with it, especially when it comes to particular legal matters. That’s why it’s best to work with a legal business firm to help you understand all your legal requirements and responsibilities.

About the Author


The information provided on this website is intended for general informational purposes only. It should not be construed as legal advice or legal opinion on any specific matter. The content on this blog is based on the knowledge and experience of the authors up to the date of publication, and it may not reflect the most current legal standards, regulations, or interpretations.

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