How to Avoid Legal Business Risks
While there is no such thing as a business with no risk, most savvy business owners look for ways to mitigate risk as much as possible. Being aware of these three legal risks will create an understanding of the future of your business.
- Trusting a verbal or handshake agreement. This is more common early in the life of a new business, and generally involves someone the business owner already knows and trusts. New business owners tend to reach out for some help but don’t have the cash to pay for it, so they make a deal for a piece of the business or the deal at hand. “No problem, you think, we trust each other.” That thinking has landed many an entrepreneur in court, or without a company. These cases turn into your word against theirs, which usually will not turn out so well for you, especially if your business is successful. Always, always put agreements in writing.
- Unintentionally using someone else’s intellectual property. You have an idea you think is going to revolutionize a market. You Google it and nothing turns up, so you throw everything you have into the development of this idea. Just as you are beginning to get some traction in the market, you receive a Cease and Desist letter telling you that your company has infringed on an existing patent, trademark or copyright. If you don’t comply, you’re going to court. But even if you do comply, you have lost a big chunk of your investment in a company that can go nowhere. Before you name your company or try to capitalize on an idea, you need to have a trusted attorney perform a detailed search so you will know if your name or idea may potentially infringe on an existing trademark or patent.
- Engaging in unfair competition. Every state has unfair competition laws, and one of the most common violations is when companies hire a superstar from a competitor and that new hire then brings business from their old company to yours. This will most certainly land you in the middle of a lawsuit. You can still hire that superstar, but you must make sure that he or she does not use confidential information from their previous company to profit your company.
One of our primary services is a LIFT Start-Up Session, in which we guide you through the right choice of business entity, location of the business entity, start-up agreements, intellectual property protection, employment structuring, insurance, financial and tax systems you need to start your next business and succeed right out of the gate. Contact us today to learn more about our LIFT Start-Up process for your business.