5 Mistakes Entrepreneurs Should Avoid When Starting a Business

5 Mistakes Entrepreneurs Should Avoid When Starting a Business

5 Mistakes Entrepreneurs Should Avoid When Starting a Business

Starting a business means hard work and making tough calls. However, if you find yourself guilty of these five mistakes, then you might need to reconsider the direction you’re going in.

1. Not Performing a Trademark Clearance Search

A Trademark Clearance Search is a process that ensures that the trademark is not already in use by another business. This is more complicated than simply running a name through your preferred search engine. Failing to ensure that your desired Trademark is available can lead to brand confusion and, in cases where another party can prove infringement, serious and costly litigation that could lead to the loss of your business. By consulting with a business lawyer before forming your business, you can protect yourself and your business from unwanted complications down the road.

Pro-Tip: You can perform your own initial search at USPTO’s Trademark Electronic Search Systems (TESS)  or you can also use a paid service like Trademark Now. If you need help understanding the results, please contact us.

2. Not Picking the Right Entity Structure for a Business

Picking the right entity structure for your business is critical as it will shape your growth, taxation rates, and how your business will be run. Deciding which of these entity structures will be most beneficial to you is a complicated process with multiple, sometimes equally appealing options. Choosing the wrong entity structure can lead to added taxes down the line. As always, we are more than happy to help you narrow down just which option will be most beneficial to you.

Pro-Tip: Learn more about Limited Liability Companies or Corporations.

3. Having Partners Without Any Agreements

Although not required by law in all cases, a written partnership agreement will do well to protect partners in for-profit business from internal conflict and disagreements. These agreements can serve to define things like individual responsibilities, invested capital, and salary distribution. They can also provide contingencies for worst-case scenarios such as the death of a partner or the dissolution of the business relationship. Let us help you draft an agreement between you and your partners that will best benefit all involved while still covering your own investments, financial and otherwise.

Pro-Tip: If you have an LLC partnership agreement, it is called an Operating Agreement. In a corporation, it is referred to as a shareholder agreement.

4. Failing to Obtain a Business License

Many entrepreneurs do not know that their business most likely requires some business licenses. In Florida, you have to obtain licenses from the State, County, and City in most cases. Failure to do so will result in fines at the very least and could lead to the suspension of your operations or even criminal charges depending on the services offered. Our business formation service includes a business compliance report so that you can have the peace of mind knowing that no steps have been left out.

5. High Valuation of the Company

While ambition and a desire to entice customers and investors can make it tempting to place a high valuation on your new company, it is important to focus on portraying your business honestly and realistically. Overvaluing your assets as the result of hype and ambition will almost assuredly end in ruin. Unrealistic or misleading expectations hinder plans for growth and lead to crippling pressure all around.

Starting a business can be a challenge, especially if you’re on your own. Finding the right small business attorney to advise you on your journey can set you on your path to success. Contact us today.

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About Us

FL Patel Law PLLC is a boutique business law firm dedicated to entrepreneurs and companies.

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