Legal mistakes that your startup should not make

As I’ve been visiting startup companies and meeting passionate founders, one thing keeps popping up: LEGAL MISTAKES. And let’s be real—nothing slows down that momentum faster than unexpected legal hurdles.

Here are some of the key legal mistakes I’ve seen startups make (and trust me, these are costly!), plus how to dodge them early on:

1. Choosing the wrong legal structure
Starting out, the excitement often overshadows this crucial step. Picking the right legal structure (LLC? Corporation?) isn’t just about paperwork—it’s about your taxes, liability, and future investors. A quick consultation can save you years of headaches.

2. "Handshake deals" instead of contracts
Your team’s growing, partnerships are forming, and the energy is high—so you skip the contracts. Sound familiar? Every relationship, from co-founders to contractors, NEEDS clear terms. Protect yourself and avoid messy disputes with strong agreements from the start.

3. Forgetting to protect your IP
Your brand and innovation are everything. But what happens when someone else claims your hard work? Secure trademarks, patents, and copyrights early on. Don’t let your vision be someone else’s profit.

4. Not staying compliant with regulations
Local regulations might seem like red tape, but ignoring them can result in big fines. Employment laws, data protection (yes, GDPR!), and industry-specific rules—make sure you’re playing by the book.

5. Misclassifying employees vs. contractors
It may seem simple, but misclassifying can cost you BIG. Don’t get hit with penalties; have clear agreements that define roles, responsibilities, and expectations.

Startups are built on innovation, passion, and speed, but trust me—you don’t want to speed past these legal essentials. The right legal foundation can make or break your business.

Originally published on LinkedIn

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