Top 3 Legal Mistakes New Entrepreneurs Make (And How to Avoid Them)

When starting a new business, handling the legal requirements may seem like another chore on your list. However, it is extremely important that all legal-related requirements are handled properly and efficiently.

Below are 3 legal mistakes new entrepreneurs make and how they can be avoided. 

1. Waiting until you’re in trouble to set up legal protections

Waiting until you’re in trouble to set up legal protections can be detrimental to your new startup. If you are sued before legal protections are set up, they can’t help you. Preventative care is critical, especially as a new business. Having a legal professional to assist you can help avoid any potential problems with your new legal protections. 

2. Not picking the right legal entity. 

Picking the right legal entity can have negative consequences from the beginning. Picking the right legal entity dictates how taxes prepared, how much income you keep, and how books are kept. Ultimately, it dictates your financial security. The decision of which corporate entity you choose should not be done lightly. 

3. Not having a register agent. 

All corporations, LLCs, or Limited Partnerships must have a registered agent. They must have a registered agent in their state of formation and any state that company qualifies to do business in. A registered agent is responsible for ensuring that you receive important legal documents, as well as official government notices.