Although starting your own company can certainly be an exciting process,
it is also one that be confusing and can spark many questions. Unfortunately, too many startups make common mistakes that can land them in hot water later.
Read on to learn more about these mistakes and the benefits of hiring a West Palm Beach business startup attorney to help you start your company in the most successful way. Whenever you can avoid common mistakes, you save yourself time and money.
1. Incorrect Business Formation –
- One of the first decisions that any founder should consider is the legal
- under which to operate your business.
- There are many different types of business forms available to startups, including:
- Limited partnerships
- Sole proprietorships
- General partnerships
- C corporations or S corporations
Sadly, too many founders start their business without considering all the pros and cons to each business formation type. Selecting the incorrect the business formation type can mean various legal issues, significant liabilities, and even higher taxes.
2. Disagreeing with Co-founders – You must agree with your co-founders early on in the process about how things will be divided among co-founders. Not doing so can lead to big problems down the road. Think of your founders’ agreement as a type of prenuptial agreement for business.
There are several different things you need to consider in such an agreement, which should include:
- Who owns what percentage of the company?
- What are the responsibilities and roles of the founders?
- How much time commitment for each founder is expected with regard to the business?
- What happens if one founder leaves?
- Is ownership percentage based on continued involvement in the business?
- What are the salary expectations for founders?
- How will the sale of the company be decided?
- What is the overall vision and goal for the business?
All of these should be carefully considered before you start your new company. These are not always easy questions to answer but a West Palm Beach business startup lawyer can help you work through these challenging issues.
3. Fail to Use a Standard Contract – Every company should have a standard form of contract in place to serve as an “agreement” between clients and customers.
Although there is no typical standard form of contract that could be applied to every situation, you want to have a contract that you hope the other side will not negotiate with much.
In order to do this, you want to make sure that it looks professional and has been reviewed by a West Palm Beach business startup attorney. You also want to include clauses about how future disputes will be resolved.
How to Minimize Disputes
Minimize or eliminate any representations or warranties about the service of product where you can by having a contract or operating agreement in place.
You also want to clarify when payment is due, how pricing works, and whether any interest or penalties will be applied if payment is not made. Having this structured upfront can go a long way towards minimizing disputes down the road.
Learn more about the most common mistakes to avoid when starting a business.
Start Your Business Off on the Right Foot with a West Palm Beach Business Startup Attorney
Too many companies are very excited to get their first book of business but have not properly considered how their contract influences them and what they should consider going forward.
Having a knowledgeable West Palm Beach startup business attorney help you with your contracts not only protects you now but can be essential for laying a foundation for protection down the road.
Since the most important document for most businesses is the contract, you need to have one that you feel protects you now and well into the future.
Visit here to get your business started on the right foot with a West Palm Beach startup business attorney.