Lack of structure
Forming a corporate entity may seem like an unnecessary complication, but he reality is that by establishing a corporate structure, whether an S-corp, a limited liability company, a general or limited partnership, or any number of specialized entities, you can protect your personal assets from any liabilities you incur in your business, minimize your tax liabilities, and take advantage of other benefits afforded by the law.
Undefined roles and responsibilities
While everybody may be on the same team, failing to clearly define the roles each of you has in the business -who owns what, who does what, and who controls what- is a recipe for conflict and confusion. You and your co-owners need to have a written partnership or shareholder agreement that makes clear the respective rights and obligations of each owner.
No exit strategy
Business partners can grow apart or have different visions and goals as the years go by and may ultimately want to say goodbye or cash in their chips. Knowing how and when owners can sell their stake in the business, how much they should be paid for their shares, and who can buy an interest in the company is crucial. Have your attorney prepare a buy-sell agreement that addresses these back-end issues up front to provide for smooth transitions in the future.
As an entrepreneur, you're one of those folks who takes things into their own hands. Combine that can-do attitude with the seeming ease and affordably of do-it- yourself legal websites and forms, and it can be tempting to see your laptop as your lawyer. But saving a few dollars upfront by not working with an experienced small business attorney can cost you significantly more in the long run. Filling in some blanks on preprinted forms that don't address your specific needs, goals, and issues can leave you exposed to a number of problems that an attorney could have helped you avoid. With so much to do and so many other things to worry about as you try to get things off the ground, get someone on your team who can bring you peace of mind and ensure that you are positioned for success.
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