Six common mistakes companies make about business law
Everyone needs to stay on the right side of the law, and while that’s easy enough as an individual citizen, it gets trickier if you’re responsible for running a company.
The best way to avoid getting into legal hot water as an entrepreneur is to learn from the mistakes of others, so here’s an overview of snafus that often trip up businesses.
1) Not getting business law advice from experienced attorneys
First and perhaps most importantly, if you don’t consult experts in business law, you’ll be far more likely to run into the rest of the issues we’ll discuss momentarily.
It’s not just enough to work with any business law specialist; you have to pick a pro who’s based in your area. For example, hiring the best attorneys in New Orleans will ensure that the advice you receive is tailored to the unique needs of your Louisiana-based business.
2) Forgetting about the importance of licensing and permits
Many professions have specific licenses and permits which you’ll need to procure if you want to offer your services.
Furthermore, many of these means of accreditation are also state-specific, so you might need to reapply for the right documentation if you want to operate elsewhere in the country.
3) Failing to manage record keeping effectively
It’s your responsibility to ensure that every aspect of your operations is thoroughly documented and that this information is stored in a logical and easily accessible manner.
If you don’t, it’s not just that you’ll struggle to do things like filing tax returns and managing HR issues, but you could also end up under scrutiny when external auditors come calling. In particularly serious scenarios, you may become individually liable for business debts.
Following best practices for recordkeeping is the only way to steer clear of these dilemmas and many others besides.
4) Rushing to accept investment
When a third party decides to invest in your business, it can be game-changing. But should your company struggle or even fold, leaving investors out of pocket, there can be ramifications.
So long as you have an attorney on your side to oversee the process of accepting outside investment, you should be able to protect yourself from the potential for a lawsuit further down the line.
5) Mishandling NDAs
Non-disclosure agreements are a powerful legal tool, particularly for small startups that have the potential for significant growth.
However, if you aren’t putting NDAs in place with employees and contractors alike, you could be left without a leg to stand on if a former team member heads to a rival firm and gives away all of your secrets.
Having robust employment agreements with everyone, and factoring in NDAs as well, will shield you from such an eventuality.
6) Overlooking IP laws
For startups, intellectual property is often the most valuable asset you possess, and yet it’s also often the case that companies aren’t taking the steps they need to prevent their IP from being infringed or outright stolen.
You need to take clear and unambiguous ownership of your IP, such as by registering trademarks and copyrighting unique creations. Then when disputes do arise, you have a means of proving that a given asset belongs to you.
Make sure you stay within the law
Mistakes made regarding business law can occur through ignorance, or through a lack of attention to detail, or an overabundance of confidence.
Whatever the case, if you’re involved in litigation early in the life of your latest entrepreneurial endeavor, it can bring it to a premature end. So the step of seeking preemptive legal advice to minimize the chances of falling foul of the law is crucial.