Getting a startup off the ground is no easy feat. There are plenty of legal issues startup owners must navigate, in addition to developing amazing products, enlisting quality staff and making decisions about company marketing.

Proper navigation of these issues can help you sidestep the following common mistakes that plague many startups upon creation. It can also help you avoid costly legal action, which can be detrimental to a new business. 

Choosing the wrong business structure 

The legal structure of your startup dictates things like taxes and liability. A sole proprietorship (meaning there is only one owner) leaves business owners vulnerable should litigation occur, while a limited liability company (LLC) protects owners from lawsuits by establishing the business as a separate legal entity. There are also corporations, which offer the same liability protections but can result in double taxation on the personal and corporate level. S corporations are a good option in this case, as profits and losses “pass-through” to individual returns.

Not developing and documenting HR practices

Human resources ensure staff has access to important information about their workplace. It also provides employees a place to address grievances and other work issues. Without a solid HR strategy in place, your startup may face serious legal issues should a worker claim discriminatory practices. Without proper documentation, it will be difficult to establish any actions you took to rectify problems, mean it will essentially be your word against the claimant.

Leaving intellectual property vulnerable

Protecting valuable intellectual property takes place in a number of ways. Copyrights protect artistic works (including books and movies), while trademarks safeguard words or symbols associated with a business. There are also patents, which prevent others from profiting from an invention you created. Knowing which type of protection to apply for, and applying for it as soon as possible, is integral in stopping others from taking your ideas.