3 Major Mistakes Commonly Made by Small Businesses
Obtaining legal representation is one of the first steps you should take when starting a business. Many business owners who attempt to navigate the process themselves find that they ultimately pay more in fees and subject themselves to regulations that could have been avoided by consulting an experienced business litigation attorney in West Palm Beach. Below are three common mistakes made by small businesses when starting out.
1. Filing the business as something other than a corporation or LLC
Since many small businesses fail to consult with an experienced lawyer beforehand, they may not chose an operating entity that will suit their needs. An experienced lawyer can help you decide if you should form your company as a corporation, partnership or limited liability company. It is important to choose the best operating entity to meet your needs at the beginning to avoid becoming subject to significant liabilities later or be required to pay taxes that could otherwise be avoidable.
2. Failing to create a great standard form contract that favors your company
Though there really is not a single standard form contract that can be copied exactly for every client, small businesses should have an initial form that favors its interests, and then alter that document based on each client’s specific requests afterwards. Take a look at what others in your industry are doing, and base your standard form contract on one that suits your company well. Your company’s contract will need to include a clause relieving it from breach if unforeseen events occur, and one explaining how disputes will be resolved. This form should not be too long of a read, but should clearly spell out the pricing, show when payments are due, and explain what penalties or interest will be owed if payments are not made.
3. Ignoring securities laws when issuing stock to angels, family, or friends
If a small business is a corporation, the sale of stock may be subject to federal and state securities laws that require that the shares sold must comply with certain disclosure, filing, and form requirements. Significant financial penalties can be levied on the business and founders if these laws are not followed. Hiring a knowledgeable business litigation attorney in West Palm Beach to advise you if your company is required to comply with securities laws and to document the sales of your company’s shares will help ensure that your business is in compliance with these laws and does not face any potential repercussion in the future.
Let Kelley, Fulton & Kaplan represent your small business
Kelley, Fulton & Kaplan, we have the experience and knowledge to guide your small business every step of the way. If you are looking for a qualified business litigation attorney in West Palm Beach, we invite you to schedule an initial consultation and let our attorneys get acquainted with your company’s individual situation.