Five Ways to Legally Hurt Your Business

A list of things that a business can do to hurt itself by not taking the proper precautions under the law.

1. Fly Solo.

Business has enough risks, so why risk both your business and your personal assets? Operating as a corporation or a limited liability company protects your persons assets from your business creditors. Setting up a corporation or a limited liability company is relatively inexpensive - far more inexpensive than finding your home and personal bank accounts attached by your business creditors.

2. Not Setting Up a Corporation or Limited Liability Company Properly.

Paying an attorney to set up a corporation or a limited liability company looked like an avoidable expense when you saw that online or computerized program. If you cannot afford an attorney for an incorporation or a limited liability company, then you need to seriously consider whether you have the capital to run your business. Incorporating a business involves more than sending the Indiana Secretary of State Articles of Incorporation and a check. You do not want to wake up on day and find out that your incorporation incorporated nothing. Why not? See #1. An LLC operating agreement is a true retail product and you can find yourself with even more problems than with a stillborn corporation. These kinds of problems lead two kinds of attorney fees: big ones or just one to a bankruptcy attorney.

3. Fail to Protect Your Intellectual Property.

What is intellectual property? Trademarks, copyrights, patents, and trade secrets. The first three require filings with the federal government for full protection. Trade secrets require self-help. More importantly: these are the things that you actually make you money. If someone uses your business name or your business product, this steals from the work you did. Don’t protect it and it is gone and so goes your business. You need an attorney for the work on trademarks and copyrights and patents (you actually need a patent lawyer for patents), and you should have an attorney to review your trade secret protections. If you cannot afford these services, then you better ask yourself if you can afford to stay in business.

4. Fail to Protect Against Employees.

You know to keep an eye on the cash register even if your business no longer has a cash register. What about the other assets of your business? The trade secrets, the company goodwill, the company client list? Ask this about your employees: if any left, which ones could truly harm the business? Now ask yourself about those particular employees: do I have a non-compete agreement? If not, why not?

5. Never Establish a Working Relationship with your attorney.

Here is the best tip I can give any business owner on saving money: get your attorney involved at the start of the process and not at the end. Litigation costs more than a year’s consultation.