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Common Small Business Mistakes
Not Getting an Experienced Corporate Attorney
Every growing business faces issues that require the services of
an experienced attorney. Issues such as stock-option plans, employee
negotiations, state and federal tax rates and intellectual property
rights all require a corporate lawyer experienced in representing
start-up and emerging companies. And though such attorneys charge
more than generalists do, the money you spend on experience will
save you time, aggravation and money in the long run.
Ignorance of the Law
Just because laws are numerous and complex doesn't mean your business
can ignore them. Learning a little about the following basic areas
of the law can keep you out of legal hot water:
Basic contractual rules
How to protect your ideas and inventions (copyright, patent,
trade secrets)
Major employer-employee laws
Securities laws affecting how you can raise capital for your
business
Governmental regulation of your industry.
Not Keeping Proper Corporate Records
Improper record keeping can cause problems with the IRS, hamper your
ability to raise equity capital and could result in personal liability.
And yet, small businesses are notorious for failing to keep the records
required for incorporation. Failure to document meetings of the Board
of Directors and shareholders, failure to record stock issuances and
failure to document stock transfers are common infractions of the
guidelines that protect the status of corporations.
Not Clearly Documenting Partners' Rights and Responsibilities
Founding shareholders or partners should have an agreement that
answers the following questions:
How much time and effort is each person expected to contribute?
How much capital will each person contribute?
What happens if the business needs more capital?
What happens if one person leaves the business?
What happens if one person dies?
Will the stock or partnership interest be bought back from the estate of the deceased or from the person leaving the business?
Starting the Business as a General Partnership Instead of a Limited
Liability Entity
Under many states' laws, the partners are jointly liable for the debts
and obligations in general partnerships. If the business encounters
a problem, all of your investment in the business - as well as all
of your personal assets - is at risk. There are other legal options
that avoid liability - corporations, LLCs and limited partnerships,
for example.
Getting Involved in Litigation
Litigation fees can be astronomical, and they can quickly drain
management time and resources. Consider alternative means of dispute
resolution, such as mediation or arbitration. Or, if a reasonable
settlement offer is available, think seriously about taking it instead
of spending more time in litigation.
Ignoring Intellectual Property Issues
Even low-technology companies have intellectual property issues
that may be important for the future success of the business. For
example, do you require your employees and consultants to sign Confidentiality
and Invention Assignment Agreements? Have you registered for a trademark
for an important company logo or product? Do you put copyright notices
on your written information? Are your trade secrets adequately protected?
Annual Budgets are a component in small business
For an existing business, this is a realistic budget for the current fiscal year based on past income and expenditures. It includes anticipated changes in income and spending that may occur during the year. For a start-up business, this is a realistic projection of the income and costs of doing business for a year.
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News about Business Attorneys.com cases in Kentucky and nationwide:
Definition:
A month-by-month future projection of income and expenditures over a period of time, usually a year. The projections for an existing business are based on current cash flow patterns.
Profit
Definition:
Profit the excess of revenues over expenses.
Acceleration Clause
Definition:
A clause (often in mortgages or other loans) where some action will occur ahead of schedule as a result of some other action. For example, an acceleration clause in a loan may mean that the full amount is due immediately if the debtor misses two monthly payments in a row.
If you live in the following cities and need an business law attorney you should contact
our Business Law Attorney as soon as possible:
Ashland
Bardstown
Berea
Bowling Green
Campbellsville
Corbin
Covington
Danville
Elizabethtown
Erlanger
Florence
Frankfort
Ft Mitchell
Georgetown
Glasgow
Henderson
Hopkinsville
Latonia
Lexington
Louisville
Madisonville
Mayfield
Morehead
Murray
Newport
Nicholasville
Owensboro
Paducah
Pikeville
Radcliff
Richmond
Shelbyville
Shepherdsville
Versailles
Winchester
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