Starting a new business is a challenge, particularly in the aspects related to incorporation. Whether you are planning to start up a small business or a corporation, there are certain guidelines that you need to follow. Small mistakes in the initial stages can cost you money, customers and even your reputation in the market in the long run.
Therefore, it is important to be well aware about the mistakes that you need to avoid while you are incorporating your startup. Let us check out five startup mistakes that you should know about.
Not choosing the right business structure
When you plan to set up a new entity, the first thing that you need to do is to decide a business structure for the setup. The options include a sole business, partnership, corporatism and a Limited Liability Corporation (LLC). Consider your circumstances and requirements to decide the model that works best for you. Failing to do so is a mistake that can cause lots of problems later on as you may need to change the business structure entirely at some stage.
Not taking legal assistance right from the beginning
The best startup approach is to form a LLC, which gives you liability protection as well as involves minimal formalities and paperwork. Whether you opt for LLC formation or any other business model, taking legal assistance is a must to avoid any hassles later on. Hiring an experienced business attorney is the best way to ensure that all the contracts and legal compliance requirements are taken care of. Trying to save legal expenses can bring challenges for startups as they are not well aware of the legal loopholes of business.
Not completing the paperwork
Startup incorporation involves a great deal of paperwork as there are several forms to be filed and contracts to be signed with suppliers, employees and customers. Not completing the important paperwork can land you in trouble later on as you may encounter legal problems or contractual disputes later on. Have the paperwork handled by a professional attorney to ensure that everything is in place.
Keeping information from your attorney or partners
Another major mistake that you can make while incorporating your startup is to hide facts and information from your attorney or partners. Since these people are as much involved in the business as you are, non-disclosure of information can build into a major issue. Keeping facts from the attorney can land you into legal trouble while doing so with the partners is a breach of trust.
Ignoring preventive measures
Even if you do everything right while incorporating, there are some preventive measures that you need to take for ensuring sustenance and growth. These include establishing a proper taxation structure, reviewing the documents and contracts on a periodic basis, getting coverage for business risks and hiring qualified and committed workforce. Ignoring these preventive care measures is another mistake that startups need to avoid.
Establishing and nurturing a startup are easier said than done. If you are able to do it well, you may be able to build a flourishing enterprise in the long run. Avoiding these mistakes can help you streamline the incorporation of your startup and take it on the growth route as well.