In business, there’s no escaping this simple fact: we operate in a world of laws. In many cases, we might not agree with these laws, as excessive and wasteful regulations hamper the progress of innovation. But many of these laws work to our advantage, and there are good reasons they’re kept in place.
These are the kinds of laws you don’t want to ignore, because ignorance can mean mistakes – and legal mistakes can easily sink a business that’s straddling a thin line between profit and disaster.
Luckily, there’s a quick cure for ignorance: knowledge. That’s exactly what this article is here to provide. We’ll take a look at common business law mistakes so you learn about them the easy way rather than the hard way – just make sure that you take these lessons to heart to ensure you remember them the easy way.
Mistake #1: Ignoring intellectual property registration. Whatever innovation your business has to offer that separates it from the rest of the market, it only makes sense that you want to keep that innovation yours. You can do this through copyrights, trademarks, and other intellectual property protections – but only if you actually register for these protections. Without a patent on your new invention, for example, you’ll be highly susceptible to intellectual property theft. If this erases your business’s unique standing in your market, it can be a sin of omission that puts you out of business.
Mistake #2: Not using nondisclosure agreements. Speaking of intellectual property, nondisclosure agreements (NDAs) are great ways to ensure that your company’s inner workings are kept “inner.” Working with contractors and freelancers can be a great way to get work done without the commitment of hiring a full-time employee, but without an NDA, your business will never be fully protected. Of course, NDAs can be unnecessary when a contractor is not exposed to any sensitive information, but you know the expression – better safe than sorry.
Mistake #3: Ignoring previous legal commitments. Let’s say you recently started your business, starting out with side jobs as you work full-time for a similar company. If you have a non- compete clause in your agreement with that company, then your business can actually be taken to court. That’s no way to get a business started, of course. So how do you start the business? Well, you’ll have to take a look at your previous legal commitments. Are there ways out of that agreement that will allow you to form a competing company? Ask these questions before you start the new business, not after.
Mistake #4: Failing to put a corporate structure in place early on. When a business starts out, it should have a solid structure in place – especially if you think that this business is going to take off quickly. Why is this corporate structure so important? Because you have to put down who controls what and who is responsible for what on paper before the business takes off. Otherwise, you can have certain business partners walking in later and claiming that they’re entitled to a much larger stake of ownership in the company than they really are – and if you don’t have a written corporate structure in place, you’ll have no solid way to refute these claims.
Mistake #5: Being ignorant to government regulations. We all know that there are certain laws which govern our society, and we work to live within those laws. But when it’s time to run a business, we often look for the shortcuts and circumventions that can save money and time. The problem with these shortcuts – in addition to lowering overall service quality in many cases – is that they’re often against government regulations in your field. Being ignorant to these regulations is a sure way to get your business shut down, or, at the very least, suspended while you bring everything up to code. Be aware of all the regulations relevant to your business, and always make sure that you would stand up to any inspection.
Just because we’re calling attention to big mistakes people make in business law is no reason to walk on eggshells. On the contrary, you should be able to run your business with confidence when you address all of these issues and tackle your problems head-on. Make sure that you don’t cut any corners or forget to put something in writing because you simply don’t feel like it. Commit yourself to running a successful business and the right business practices will follow.