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Legal Pitfalls to Avoid when Launching Your Start-Up

Law Office of Craig Ching, PC Feb. 28, 2022

Launching a start-up can be an exciting milestone for any entrepreneur, but doing so comes with its fair share of challenges. When starting a business, it is easy to overlook legal matters, especially if you focus on building your idea. While it is fine to do this, it is equally important to learn about the legal processes that setting up and managing a business entail. Overlooking this part can quickly turn into stress and headaches if you take a wrong turn.

Regardless of what type of start-up you have, you will need to comply with regulations and policies. After all, the last thing you would want is to run into legal trouble right after your initial launch. Before you jump right into this, get to know more about some of the most common issues that entrepreneurs face with their new businesses. Here are five legal pitfalls to be wary of when launching your start-up.

Choosing Not to Incorporate

While sole proprietorships and partnerships are common among businesses, these structures come with many risks for the owner. Specifically, you may have to pay higher taxes and bear heavier liabilities, putting your own assets at risk if your business went bankrupt or was sued. Incorporating allows you to make your business a separate entity from you, as the owner, so you may be able to reduce your personal tax and liabilities.

Should you decide to incorporate your business, make sure to consult with a lawyer as there are many types of corporations to choose from. Each type has a different structure and corresponding fees, so knowing all your options is crucial to making the right decision.

Violating Trademark Infringement

Choosing the right company name can make all the difference with your branding and how customers respond to it. However, in doing this, you must also be careful with your name and logo and make sure it is not infringing on another company’s IP. Conducting due diligence with a lawyer can help prevent this from happening, as violations can cost you a significant amount. In the same manner, consider registering your business name and logo as a trademark to protect your IP after yours have been approved.

Not Having Legal Counsel

Small business owners often opt not to seek legal counsel or settle with inexperienced advisors to save on costs. While this may initially seem prudent, many do not realize how important it is to get proper legal advice at the beginning of your business to avoid potential violations and penalties.

In the long run, these can cost you more than what you spend for a lawyer at the start-up stage, so it is best that you stay proactive from the beginning. With the help of knowledgeable and experienced counsel, you can make sound decisions and avoid getting into legal problems.

Failure to Prepare Proper Permits and Licenses

Depending on the nature of your start-up, you will need the right licenses, permits, and registrations to operate. The basic requirements often include a business license and a tax permit. However, other businesses may also need specific licenses, so taking your time to learn about this beforehand can save you from legal issues later on.

At the Law Office of Craig Ching, PC, we specialize in all of the above steps. If you would like to learn more about us, click here to schedule an initial conversation.