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2 legal mistakes that many startups make 

On Behalf of | Jun 12, 2024 | Business Formation |

Even when business founders take every possible precaution, succeeding with a new company is not easy. While it is possible to make it, a significant number of startups fold within the first few years. 

A founder of a new business may not be familiar with all of the legal intricacies involved in the commercial world. Here are some of the more common legal mistakes that many startups make. 

1. Being too informal 

Many new and exciting startups are founded upon casual conversations and bringing ideas to fruition. However, businesses cannot function on informalities forever. Sound legal contracts are at the heart of every successful business. Ownership stakes, client relations, employment relationships and vendor agreements should all be backed up by written contracts. This not only prevents disputes from occurring but provides a source of remedies should they arise. 

Formality is also very important when it comes to record keeping. New companies must have a record of every translation they make. This is the case for several reasons, but it is particularly true when it comes to paying tax obligations and remaining compliant. 

2. Forgetting about intellectual property

The success of any company is largely centered around its brand. Coming up with an innovative concept is one thing- protecting it is another. Many startups forget to protect their brand through copyright law, trademarks, patents and other forms of intellectual property protection. A failure to protect intellectual property leaves startups exposed to bigger rivals in the marketplace or companies looking to steal ideas and pass them off as their own. 

To get your startup launched on the right footing, it may benefit you to seek legal guidance. 

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