5 Common Mistakes Usually Committed In Running A Start-Up Without A Qualified Attorney

5 Common Mistakes Usually Committed In Running A Start-Up Without A Qualified Attorney

Nov 20, 2017, 4:08:10 AM Business

Is there any start-up or business that can exist without taking care of the legal aspects of business? Apparently not and, unfortunately, if you establish a start-up or a business, you just cannot run away from legal realities. There are many legal issues that can make and break your business.

The importance of law for your start-up cannot be ignored, as this tool helps drive you towards your goals and push your company towards success. This said, it is important that you don’t fall prey to common legal mistakes that start-ups and entrepreneurs are most prone to.

We give five of them:

#1 Not establishing a corporate structure

It is common to find solo entrepreneurs defaulting on establishing a corporate structure, since they don’t want to add to their burden and get into unnecessary complications. They fail to understand that an attorney can protect them legally from all kinds of liabilities their business may suffer, simply by establishing a corporate structure. This structure can be in the form of a limited liability company, a general or limited partnership, an S corporation or any other specialized entity. This step also minimizes tax liabilities and provide all the benefits of law.

#2 Not being careful about infringing on intellectual property

As an entrepreneur, you need to be careful about what you name your company and what logo you design. Of course, your endeavor would be to make your company stick into the minds of your potential customers through a catchy name and an impressive logo. But, throwing caution to the wind and not checking whether such a name or logo is infringing somebody else’s name and logo can make you liable for infringement claims. In addition, you will go through a lot of trouble in changing them again.

#3 Not clearly defining the roles of each partner

You and your partner(s) may start with a common dream and try to steer the business to success. But, without clearly defined roles for each, such as who does what or who owns what or who controls what, it ends in confusion, resulting in conflict. Thus, an attorney becomes indispensable in drafting a written partnership or shareholder agreement that spells out respective rights and obligations of all.

#4 Not drafting an exit strategy

Although you, as an entrepreneur, may give shape to your business idea in association with your partner and share a common vision with him or her, the thought of splitting up never occurs at the beginning. However, it is likely that this association may sour after some time, when you or your partner may pursue a different vision or goal, and may want to part with each other. It is for such an eventuality that you should get a buy-sell agreement prepared by your attorney to ensure a smooth transition.

#5 Not going in for an attorney

Since, you have laid the foundation of your start-up and built it up with your own hands to make it a success, you may think of donning the cap of an attorney as well, thinking that legal websites will guide you through. This is a mistake, since not hiring an attorney who has experience with small businesses, may prove expensive in the long run. An attorney will not only guide your business in a proper way, but will also help you in avoiding pitfalls that you may fail to see through sheer lack of knowledge and experience in matters legal.


Legal aspects assume utmost importance in running a successful start-up. An experienced attorney becomes indispensable not only in guiding your correctly in legal matters, but also in helping to steer clear of the aforementioned mistakes.

Published by Kaushal Shah

Comments (1)

Nov 20, 2017, 5:49:40 AM

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