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Laying Down the Law

Don't be legally blind--watch for these common start-up blunders.

You just started your business--who has time to think about an exit strategy? If you're putting off making such plans, you've committed a very common legal mistake, says Alan S. Kopit, partner at Hahn Loeser & Parks LLP in Cleveland and advisor to Lawyers.com. "Now is the time to decide those issues--not after a problem develops," he says. Here, Kopit runs down a few more common legal blunders to avoid:

  • Failing to get good advice: Don't ever go it alone. Instead, Kopit suggests entrepreneurs enlist the services and counsel of a good lawyer, an accountant and an insurance agent at the very beginning of their start-up ventures. "Younger [entrepreneurs] particularly need people to bounce their ideas off of," he says.
  • Neglecting important employment considerations: Hiring issues are a major legal consideration for start-ups. Consider whether you need a written noncompete contract with employees, whether you'll use independent contractors and so on.
  • Selecting the wrong business structure: Should you classify your business as a sole proprietorship, an LLC, an LLP or a corporation? "There are tax implications that go along with [each choice]," cautions Kopit. Be sure to weigh each option with the help of your advisors to determine which form will best serve your business plan.

For more information, log on to Lawyers.com and get a free copy of Kopit's handbook, Getting Started on Your Legal Legwork.


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