Many small business owners are gung-ho to launch their new businesses without first thinking through any of the legal issues that could lead to litigation. At WEDC, we like to help our clients identify potential legal pitfalls well in advance to help smooth their road to success. The following are on our Top Five List:
1. Put it in writing
Don’t take a friend or colleague’s word for it. When it comes to making an agreement, better to have it all in writing. Friendships go bad and people’s circumstances and priorities change, especially when it comes to money. This is particularly true for partnerships. It’s much safer to commit to paper such matters as responsibilities, ownership arrangements, and financial terms. It will help you avoid some of the accusations and issues that can lead to unpleasant fighting.
2. Don’t rush to sign
Many entrepreneurs tend to sign agreements without considering the consequences of the terms and conditions often embedded in the small print. When it comes to signing a contract, a legal professional’s advice can be invaluable.
3. Choose the right business structure
Though it may cost more to set up a corporation, it is critical to keep your business separate from your personal assets. Regardless of the business structure you choose, a poorly thought-out choice can put your business at risk and lead to painful tax bills, or even expose you to unexpected personal liabilities.
4. Do your research
You don’t want to invest in a brand or product only to learn that someone else has thought of it first. And, quick Internet searches or a speedy look at the US Patent and Trademark office database won’t cut it. Invest the time and money in a proper search, conducted by a legal professional, to avoid disappointment down the road.
5. Keep your new biz on the QT
Your ideas are often your greatest business asset. Regardless of how excited you are to share inside information about your new business with friends, colleagues, and professionals, a signed non-disclosure agreement is essential for maintaining your competitive advantage.