How to Avoid Business Law Mistakes: 10 Ways

Innovation companies are created both by newcomers and by experienced business players. But both of them often face serious legal errors that can either slow down a progress of the project or put a cross on it. Solving problems usually turn out to be an expensive and time-consuming process, so it's better to prepare for them in advance and try to evade them.

Business Law Mistakes

It's not entirely correct to talk about what a beginner entrepreneur should do. There is no general law of success, or individual recipes for each of possible spheres, which would always work without fail. But the experience gained over the years allows us to talk about what exactly one cannot do to those who decided to start their own business. Of course, you may receive wisdom by stepping on all rakes yourself, but it's preferable to use O. Bismarck’s formula: “Only fools learn from own mistakes. I prefer to learn from the others’ fails”.

Choose the Right Business Structure

No matter what kind of legal partnership you are, but a lot of current firms elect a limited-liability option to individual entrepreneurship. In any case, you should consider potential taxes and nuances of protection.

Keep Your Documents in Order

Already at the start-up phase, take care of necessary agreements, partnership contracts, relevant certificates, and licenses. You must navigate the business law cases and get the consent of all parties. Do not wait until the receipt of a certain paper, even if there is no urgency in it. Having required treaties save your time and nerves when the inspection bodies ask them to present.

Advise with a Business Lawyer

Such an expert is vital to any commercial structure for settling legal nuances. He or she will aid not only adequately respond to the problem, but also prevent it. High rates of fees may initially scare off their services, but remember that business security is a priority.

Some holders believe that they can solve legal queries, guided by a textbook. In this way, they try to limit monetary costs. As a rule, similar carelessness leads to even greater material losses. Without knowledge of all aspects of commercial law, it is hard to take the right actions, but it is easy to jeopardize the whole matter.

Regardless of the opponent’s status, an attempt to deal with an issue on its own may turn into aggravation of the conflict. Protect yourself and your company, addressing to a lawyer for help. A jurisconsult will cope with negotiations or legal proceedings.

Absolute Understanding

Before signing any agreement, make sure you comprehend its points correctly. You could even apply for clarifications to your partner. If you are frankly floating in juridical matters, it is better to find an attorney who will represent your interests. But still, keep staying on top.

Do Not Mix Personal Savings with Company Assets

In particular business, there is no place for everyday emotions. Of course, you should not behave like a tyrant in relation to laborers, but you must observe social distance and be guided by professionalism, not personal sympathy. An akin approach is also applicable to a financial sphere. Do not think that all available assets are the same. Store your personal money separately from the company's cash flows. Even as a business owner, you cannot use the firm's current account to pay, say, your utility bills. Ignoring the mentioned nuance, you run the risk of losing the status of limited liability and go to the “full” category.

Adapt Documentary to Your Business

A lot of manufacturers resort to online resources when searching for a protocol template or other treaty. But do not mindlessly copy the source found and fill in blanks with the company’s name. Internal documentation should be agreed upon and reflect the specifics of facility or industry.

A qualitative contract is distinguished by applying a laconic language and clear provisions, indicating obligations and benefits of the parties. Specific items may be included in the text, either with a time frame or monetary amounts. You can also find links to local laws or alternative solutions to the problem that will come in handy for you at some point.

Make Sense

If you have several commercial projects, think about formulating value content for each of them. This is a quite useful procedure. So, in case of troubles in one enterprise, you may avoid them on the other.

Review of Duties

In a company with two or more owners, there is often a debate about the way forward. The dispute is resolved by a simple majority of votes. But you could consult with a lawyer how to shun similar scenario.

Sign Documents

The signature procedure also has its own tricks. First, do not delay mentioned procedure in a long box. Secondly, make sure you have all the regalia after your name. Do not rely on the word of honor of partners. Business relationships should be documented. Otherwise, you will face confusion, misunderstanding, and loss of money.

Written agreements between companions define a part of each trade and answer the question what will happen to it in case of its death or “retirement”. Labor treaties are also significant for stable work. Their absence is fraught with disputes and conflicts. The correct paper includes:

  • Rights and duties of an employee after dismissal
  • Working conditions
  • The internal policy of the company
  • Definition of a worker's classification

The last point is frequently confusing to employers. The query is whether an individual is a wage earner or an independent contractor. An error in the formulation may lead to the payment of large fines.

Change of Denomination or Address of the Firm

Any innovations about your commerce should be immediately reported to the Secretary of State. Periodically visit his/her site to see the status of own business. Be quick and with respect to the logo. If you are too lazy to register your own brand, the probability of its theft and assignment by competitors is great. In addition to intellectual property, take care of protecting internal commercial secrets.

Thus, numerous unpleasant situations have a solution and can be corrected. The main thing is to surround yourself with the right team and be active, defending your “child”. Do not neglect professional legal assistance. It is the latter what may save your business for the next generations.