When you start a new business, you must make many decisions that can have long-term implications for your professional and personal life.
During the start-up process, avoid these common mistakes that many new owners make.
Choosing the wrong business structure
One of the first decisions you will make is whether your company will be a sole proprietorship, partnership, LLC or corporation.
Many people fail to properly consider the factors that affect which business entity is appropriate for them, which can lead to legal and tax issues.
Setting up a generic partnership agreement
There is no one-size-fits-all arrangement for two people going into business together. People who neglect to develop an agreement that fits their unique needs often find themselves in messy partner disputes later.
If you are pursuing a partnership, you and your partner should develop an agreement that takes into account your individual levels of contribution, priorities and future intentions.
Failing to consider current employment contracts
If you are leaving your job to start a business or plan to run your venture as a side gig, you should take a close look at your current employment contract, particularly if your company is in the same industry. Many people find themselves in legal trouble because they ignored non-compete clauses or other requirements in their employment agreements.
There are many potential mistakes that business owners can make when first starting out, but if you carefully consider all aspects of your new venture and consult the right sources when needed, you can minimize your risk.