Laywer’s Corner: Common Legal Pitfalls for Your Business


While running an enduring and successful business there are many legal issues that will arise which are hard to predict or to know in advance. This will require you to form a relationship with an attorney that you feel comfortable with.  Below, we discuss a few common legal issues that you may want to consider.

  1. Before starting your business it’s generally wise to form an entity.

Otherwise, you’re personally responsible for the debts and obligations that your business incurs. There are several options for business structures.  When choosing the legal entity for your business, consider how you will borrow money or raise financing, how you will be taxed, the amount of required record keeping, and how you will structure the sale of your business or your exit plan.  While it’s possible to switch business structures, it’s better to determine from the beginning which entity will be most useful for the foreseeable future.

  1. Before using a name for your business make sure it’s strategic and suitable.

Do you want to fit in or stand out? Usually, you want to choose a name that is enduring, will express your values, culture, and your unique characteristics. More importantly while selecting a name, pick one that is different from existing businesses with same or similar products, goods, and services, especially in the same geographic areas. This is to avoid confusion and potential litigation.  Moreover, if you’re making a website, check the domain registries to see if the domain name is available. You may want to discuss potential names with friends and family and/or use a naming company.

  1. Obtain all necessary and applicable licenses and permits.

Business licensing regulations are different from state to state and within the state from municipality to municipality.  Local licensing may be required depending on which municipalities your business is located and operates in.  In addition to permits and licensing, your business may be required to meet other standards per applicable law.  For instance, if you’re selling cooked meals from your home kitchen, your kitchen may have to be inspected by the applicable food safety officials or your business could be shut.

  1. Protect your company’s intellectual property.

You’re likely to have intangible creations by your employees, partners or yourself. Intellectual property includes results of creativity, including the unique name of your logos, slogans, know-hows, inventions, content, drawings, designs, discoveries, or processes. So, you should require employees and independent contractors to assign their creations related to your company they develop to your company. Also, register trademarks, service marks, copyrights, patents, and make sure that you have licensing agreements with third parties.  Don’t share your business’s confidential information, strategies, know-how, trade secrets or proprietary information without first executing a non-disclosure and confidentiality agreement. To avoid domain squatters, consider purchasing related domains.

  1. Implement, draft, and negotiate favorable written agreements.

It’s important to have contracts with suppliers, vendors, clients, employees, independent contracts, and anyone else with whom you have a working relationship.  It’s not always in your best interest to value speed over accuracy. Making deals on a handshake may not lead to any immediate serious legal problems, but it can make for plenty of unpleasantness.  Oral agreements are difficult to enforce. You need to have a written agreement to set out and outline the parties’ respective expectations, obligations, and explain how potential issues will be resolved.  Also, document any modifications, changes or extensions to your agreements in writing.

  1. Finally, hire a lawyer and get legal advice.

If you’re going to spend the time, trouble, and expense of starting a business, you need to make sure your company is structured so that it protects your interests and goals. To save money, you may try to draft documents or choose an entity structure yourself. Usually, it’s more expensive for an attorney to later fix these documents or change the entity structure than to simply have the attorney work on the matter from the start. The attorney will also assist you in compliance with national, state, and local regulations and your overall business strategy. This may appear like an unnecessary expense, but why take any chances with the vitality of your business. An experienced counsel can help you spot and avoid legal issues before they occur or become destructive.

DISCLAIMER:  This article is for general information only. It’s not legal advice and doesn’t create an attorney-client relationship. This information is provided “as is” without warranty or representation of any kind. You should contact an attorney for legal advice. This information may not be applicable to your situation, or may be outdated, or laws may have changed, or the information may otherwise be unreliable, or may be subject to exceptions and qualifications, which may or may not be noted or stated and laws vary by jurisdiction. You shouldn’t act or rely on this information without seeking advice from a lawyer and receiving professional counsel based on your particular situation or delay or forego seeking legal advice or disregard professional legal counsel based on this article. Delay in seeking such legal counsel could result in waiver of any claims you may have. You acknowledge and agree that this information is not intended as a solicitation and you use this information at your own risk and we’re not liable under any circumstances, at any time in any way or for any damages of any kind or under any theory, resulting from this information, or your use of such information or any reliance on or access to this information, including but not limited to liability or indemnity or damages under tort or contract or any damages caused by viruses in this file, despite giving notice.