Top Legal Mistakes Entrepreneurs Make



When starting or running your company, the legal aspects of being an entrepreneur and owning a business will inevitably cross your mind. But many business owners push the legal aspects of their business aside in an effort to save money. Hiring a lawyer to fix your problems is much more expensive than hiring a lawyer to prevent your business from having problems in the first place. Here are the top five legal mistakes I see entrepreneurs make and steps you can take to ensure you don’t make the same costly mistakes in your business:


1. Not hiring an attorney at the outset. I realize how self-serving this sounds. But hiring an attorney when you decide to start your business is essential for your business’s success. You don’t know what you don’t know. And you can’t assess risks if you don’t first know what they are. It will cost you some money, but the most successful entrepreneurs know that an experienced attorney is part of their budget. But ultimately, hiring an attorney at the outset could save you tens of thousands of dollars (and peace of mind, which is priceless) in the long run.

2. Choosing the wrong structure and not forming your business properly. Should your business be structured as a sole proprietorship, partnership, limited liability company, or corporation? Each entity is treated differently for both legal and tax purposes. Certain entities protect your personal assets while others don’t. And depending on the structure of your entity, your business will have certain formalities and requirements it must follow in order to comply with state and federal laws. As an entrepreneur, you need to know how the structure of your entity, and the consequences of not following the required formalities, could expose you and your personal assets to liability.


3. Skipping a trademark search or not registering your trademark. Imagine spending thousands of dollars on your logo, website, merchandise, and brand only to receive a cease and desist letter from another business in your industry with a similar name claiming you are infringing on their trademark. This happens frequently because too many entrepreneurs do a simple Google search but fail to do a thorough trademark search to ensure their brand doesn’t infringe on someone else’s. This is an oversight that could ultimately cost thousands in rebranding. Also, it’s important to protect your own brand, and registering your trademark is the only way you can truly own and protect your brand.


4. Using poorly drafted contracts or no contracts at all. DO NOT PULL YOUR CONTRACTS FROM A GOOGLE SEARCH. I’m sorry to yell at you. But it’s that important. Using contracts drafted by an attorney will cost you much less than being involved in a contract dispute or lawsuit due to a poorly written contract that doesn’t protect your interests or isn’t even enforceable. We even have some downloadable, customizable templates that have been carefully drafted by an attorney if you don’t want to pay a lawyer’s hourly rate.


5. Not having certain legal provisions and language on your website. There are certain provisions you are required to have and some you should have on your website depending on your website and business. A business attorney can help you determine which provisions you need and can draft those provisions for you, limiting your online risk. Some website language and provisions you should consider are (a) a privacy policy, (b) terms of use, (c) copyright language, (d) disclaimers, and (e) affiliate disclosures.


Don’t get caught making these mistakes. If you have legal needs for your business, need a contract, or need to register your trademark, feel free to contact us.


Photo by bruce mars on Unsplash