From finding a location, to funding and finding suppliers, it takes a lot to start a small business. While it’s certainly an exciting time, it’s also a time when a lot of mistakes can easily be made. Unfortunately, legal mistakes can greatly impact the success of your business. The best way to avoid making these mistakes is by being aware of what they are. Here are 5 mistakes to avoid when starting your small business.
1. Selecting the wrong structure for your business.
There are various legal structures that you can select from when you are setting up your business. These structures, which include sole proprietorship, partnership, corporation, and limited liability company (LLC), will mostly impact things such as how you pay your taxes and which assets can be seized by any creditors.
Remember that you can change the business’s structure later on. You can start the business under one structure and change it should you need to. For instance, if you start your business alone, you may have chosen a sole proprietorship, but as your business has grown you may have added another owner and now change your structure to a partnership, corporation, or LLC.
2. Forgetting to apply for an EIN number.
In much the same way as our Social Security numbers identify us for purposes of taxes, an Employer Identification Number (EIN) does the same for businesses (with the exception of sole proprietorships). Should your business remit sales taxes from customers to the state, you will need a certificate and/or a sales tax number from the state or states in which you do business.
3. Operating without the proper licensing.
Some businesses require a state license in order to legally operate. However, others also, such as those that sell alcohol, firearms, or tobacco, must also obtain a permit from the federal government. Be sure to inquire with s professional who has an understanding of business licenses, such as an attorney, in order to ensure that you haven’t forgotten anything important.
4. Failing to protect your IP.
You may think that your sales are the most valuable asset that you have. However, you should think about your intellectual property, or “IP.” If you don’t take the steps to protect your IP, it can be stolen from you without any remedy. Common IP for businesses includes:
- Business/trade name
- Service marks
- Domain name/designs
- Product designs
- Confidential information
- Commercial trade secrets
You can protect your IP by filing for a trademark, copyright, or patent. This helps to protect your IP by preventing others from stealing it. A knowledgeable and experienced IP attorney can help to walk you through the process of protecting your IP.
5. Failing to hire an attorney.
One of the worst things that you can do is fail to properly set up your business, as this can impact what happens with your business later on. This is why it’s so important to consult with a qualified IP attorney – even prior to making any money. He or she can help you to make important business decisions, such as the proper structure and formation process. You may want to save money, but if you fail to hire a lawyer and make a mistake, that mistake may end up costing you much more in the long run.
Surovell Isaacs & Levy PLC Can Help Those in VA Who Are Starting a Small Business
If you are starting a small business, it can be overwhelming trying to remember how to do everything. You don’t want to risk making major mistakes. That’s why a knowledgeable business attorney can help. At Surovell Isaacs & Levy PLC, we work hard to ensure that our clients receive the best outcome and are set up for success. To learn more or to schedule a consultation, contact us today!
Posted in: Business Law