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Common legal mistakes often made by startups

On Behalf of | Dec 17, 2021 | Business Law |

Entrepreneurs across Michigan know that starting a new business is anything but easy. Startup companies often face growing pains in the form of significant legal challenges. Mistakes, both big and small, will happen in the process of starting a new business. Here are a few common legal mistakes often seen in new businesses. 

Not starting a corporation or LLC 

One of the first decisions entrepreneurs must make is the legal form in which their business will operate. Many new startups go the LLC route. A limited liability company (LLC) provides limited liability protection to the business owners. However, starting a business without properly structuring the company will cause the owners to be subject to significant liabilities and incur much higher taxes. 

Being unclear with co-founders 

Many entrepreneurs start their businesses with co-founders or partners. However, those who start businesses with co-founders should always make clear the details of the business relationship, especially in the beginning. Being unclear with partners or co-founders will only lead to significant legal problems down the road. 

Trademark infringement 

When deciding on a company name, be sure that the name is available to use. It is critical to do the proper research to avoid trademark infringement or domain name problems. Using a trademarked name will not only cause confusion among customers, but it can lead to litigation and other big legal problems. 

Every business owner will make mistakes. However, when these inevitable mistakes are made, startups will need the services of a seasoned legal representative. Business owners in Michigan who need legal advice or have questions regarding any aspect of business law could obtain much-needed guidance and clarity by speaking with an experienced attorney.

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