Setting up a new business involves a lot of work. As a business owner, you have to take care of different things such as developing a proof of concept, contracts of the employers and hiring the employees. When handling numerous things at a time, mistakes are bound to happen. But, committing legal mistakes can set you back and reduce the chances of success. Here are the following common legal mistakes made by the startups.
Failing to make the clear agreement among Co-founders
You have to make an agreement with your co-founders early to avoid the huge problems in the future. Creating a founders agreement will save your time and stress later on. When making the legal agreement with co-founder you need to address the following factors
- Roles and responsibilities of each founder
- Who possesses the company if one of the founders decides to leave the company or get back his/her shares?
- How the major decisions of the company can be made? (For Example, the decision may be made by the co-founders or the final decision may take by the CEO)
Choosing the inappropriate Business Structure
There is a diverse range of entities available to form. One of the decisions that founders should take before setting up the business is to select the type of entity. You may consult with the lawyer before forming a structure of your business. You can choose from different structures includes LLP, Proprietorship, Public or private company and partnership. Protect your business from legal issues by choosing the right business structure.
Not Protecting the Intellectual Property
Not protecting the intellectual property of the company is the major mistake that most companies make. Protecting the intellectual property is the important thing that startups should think of. Intellectual property is not only about the copyrights and patents. If you protect your IP then no one can claim for your product or service. Making a Non-disclosure agreement helps your company to protect intellectual property.
Fail to Comply with Tax Laws
As a startup company, you should know what kind of tax the company is subject to. Company may get into trouble if you are not following the tax regulations. Better you can hire a specialist or an accountant to prevent the organization from tax issues. The accountant let you know when and how much tax you have to pay.
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- : Infinix