Stepping into an entrepreneur’s shoes is not an easy task as it comes with multiple responsibilities. An entrepreneur needs to handle the operations of his venture as well as take care of its legal responsibilities like registering for the right business entity, applying for different Intellectual Property Rights (IPR), filing the annual returns and so on. If these legal aspects are not taken care of correctly, it can be a major problem in the future.
However, despite knowing the consequences, many entrepreneurs tend to overlook their legal obligations. This is because most business owners prefer to focus on developing their business rather than dealing with its legal issues. Consulting a lawyer in the early stages of your business is a good idea to remedy this problem. A practised business lawyer is well versed with the legal aspects of your start-up and thus allows you to concentrate on its commercial facets better.
Here’s a closer look at common legal mistakes made by startups that can be easily avoided:
1) Incorporate your Business Early
As an entrepreneur, the first operation that you do for your business should be incorporating it. It is advisable to do so at the earliest stage possible because timely incorporation comes with its own set of benefits. A major advantage is that you get to limit the liability on your personal assets, even in the case of a litigation. Also, by incorporating your business early on, you are applicable for taxation benefits provided by the Canada Revenue Agency (CRA).
2) Obtain your Business License
Most organisations require a license in order to practice their business legally. It is preferable to obtain local, federal and state licensure to run your business successfully without any unnecessary litigation. It is also applicable for home-run businesses. Getting a license is not a cumbersome process either if you consult a business lawyer. But if you operate without one, it can be expensive as costly fines are levied on business that operates without proper licensure.
3) Don’t Choose the Wrong Entity
Choosing the right business entity is where most entrepreneurs go wrong. In order to avoid this mistake, conduct a thorough research about every classification. Analyse the pros and the cons of each entity that you can apply for, be it a partnership, a corporation or a limited liability corporation. It is advisable to consult with your lawyer to help you select the right entity which allows you to earn a profit as well manage your operations easily.
4) Protect your Intellectual Property
IPRs like copyright, trademark and patent are one of most valuable assets of your business. Protecting this IP should be every entrepreneur’s top priority. Unfortunately, many startup owners are not familiar with the laws regarding their IP commercialisation and end up either ignoring them or not protecting their IP at all. The lack of an IP protection strategy makes your company susceptible to infringement and theft of identity. Hire a lawyer to help you register for your IPRs successfully.
Follow these tips to unnecessary legal troubles in the future. We, at Prowse Barrette (Previously Prowse Chowne), understand the common legal mistakes made by startups. Our team of professional experts can help you navigate through them proficiently.