One of the most important aspects of starting a new business is minimizing as many risks as possible. While a party may anticipate certain liabilities, there are a plethora of unforeseen possibilities that could put them in great risk toward losing it all.
The following are common legal risks a business owner should avoid:
- Contracts or commitments based on verbal promises: Oral agreements are typically considered as contracts during the developing stages of your business, typically with family, friends, somebody they know or think they can trust. However, it is a mistake to rely on such promises now and in the future. When mistakes occur that negatively affect your business operations, it’s immensely different to prove an obligated agreement occurred in the first place. Always establish all of your business agreements in writing.
- Intellectual property issues. For most business, their intellectual property (trademark or trade secrets) is considered highly valuable and perhaps the foundation of their success. If you have an extraordinary and uncommon idea for your company, it’s imperative to take the necessary measures to protect it. For example, have you registered for a trademark regarding a unique company product or logo? Do you require employees and consultants to sign confidentially and nondisclosure agreements? Is your written information copyrighted?
- Failure to keep adequate corporate records. Improper record keeping can result in disrupting your ability to increase equity capital and significant issues with the IRS. Declining to document meetings with employees and board members, stock issuances and transfers can put your business is serious jeopardy.
- Not hiring an experienced corporate lawyer. Due to the complexities and constant changes of the legal system, possessing a thorough understanding of Texas and federal laws is an important aspect of managing a successful business. Not only does having a qualified attorney provide you with the comfort of keeping you out of legal hot water, but it is required that he/she must be present in tax issues, employee negotiations, stock-plan options, and intellectual property rights.