Starting your own business in New York is a thrilling endeavor. However, navigating the legal landscape can often be complex and confusing. It’s easy for startup entrepreneurs to make mistakes that might lead to serious legal issues. At Morgan Legal Group, we aim to protect you and your business from such legal pitfalls. Here are the top ten legal mistakes startups make and how you can avoid them.
1. Operating Without a Legal Business Structure
Many entrepreneurs start their businesses without setting up a legal entity. This is a major pitfall as it can lead to personal liability. It would be best if you considered forming an LLC or corporation to protect your personal assets.
2. Ignoring Intellectual Property Laws
Not securing your intellectual property (IP) can expose you to potential lawsuits and loss of your business name or inventions. Register trademarks, copyright your creations, and honor IP laws.
3. Not Drafting a Comprehensive Co-founder’s Agreement
Plan for unexpected events with your co-founders. A well-drafted co-founder’s agreement will outline roles, responsibilities, and what happens if a dispute arises or if a founder leaves.
4. Neglecting to Comply with Employment Laws
New York has strict employment laws. Misclassifying employees, not providing proper benefits, or not complying with wage laws can result in hefty penalties.
5. Inadequate Record Keeping
Inadequate financial and legal record keeping may jeopardize your business. Maintain detailed records of all transactions, contracts, board minutes, etc.
6. Not Securing Necessary Licenses and Permits
Startups often overlook the need for appropriate licenses and permits – a misstep that can lead to penalties or even closure. Invest time to understand these compliance requirements.
7. Neglecting online privacy
Businesses that collect personal data from their website must adhere to state and federal privacy laws. A lack of privacy policy exposes you to legal risks.
8. Not Preparing for Litigation
Disputes or disagreements can result in lawsuits. Safeguard your business with good contracts, dispute resolution policies, and appropriate insurance.
9. Lacking a thorough Shareholders’ Agreement
Conflicts between shareholders can disrupt your business. A well-drafted shareholders’ agreement can prevent such issues by defining shareholder rights and obligations and by resolving potential disputes.
10. Misunderstanding Tax Obligations
Businesses have tax obligations that vary based on your business structure. Misunderstanding these can lead to IRS troubles. Seek a professional to understand and plan for these obligations.
Conclusion
Startups in NYC face a unique legal landscape. Protect your business from common legal pitfalls by taking a proactive approach. The team at Morgan Legal Group is here to help guide you through every stage of your business formation and operation. Contact us today for comprehensive legal support.
