6 Legal Mistakes Entrepreneurs Should Avoid When Starting a New Business


At the beginning of any business, some mistakes can happen. Every beginner in his own business is prone to make mistakes, and this is entirely normal.

Considering that, according to statistical data, 90 percent of started businesses ended their operations in the first year of existence, it is obvious that beginners’ mistakes were the ones that ruled. The possibilities of making a mistake are endless, but those connected to legal matters are the ones that cost you the most, in the end.

In order to maintain a business, it is important to avoid or at least minimize the risk of making such mistakes. One way to do that is to be aware of the most common ones, and this article is going to help you with that. Below is a list of legal mistakes you should avoid at all costs if you want to run a successful business.

1. Registering the wrong type of entity

This is the mistake that can cause an entire disaster, right in the beginning. Naturally, you would first consult a lawyer or a law firm who has experience in the field and explain what you plan to do business with. Their role is to advise you on the type of entity you should register.  Your choice of this will directly impact the way you do business, taxes, and a lot more, so don’t just save money and decide yourself, but seek professional help from firms like, to make sure you get everything right.

2. Lacking crucial documents


One should never take shortcuts when it comes to legal matters because they can cost you more than you can handle, as we said in the introduction part. One such shortcut people often make is failing to gather all corporate documents. Regardless of the fact that you’re employing your closest relatives, corporate management has to run correctly and smoothly. So, employ people with experience in this matter to make sure you don’t lack something important when it comes to contracts, agreements, stock certificates, or any other paperwork.

3. Using contract forms available on the internet

We all know how these come in handy when you have no idea how to draft a contract, but in the case of business, this is a very dangerous thing to do. Although it saves money, it can never be adapted to your particular case as it should. So, have yours tailor-made by a professional lawyer.

4. Using your personal bank account for business purposes

One thing you should divide right, in the beginning, is your bank accounts. Although this may seem like a good shortcut, it’s not because your personal liability should never be mixed with business. It’s a matter of personal protection.

5. Unprofessional decisions


There is no place for emotions in business. This is not to say that you should be a tyrant or completely neglect your emotions or those of your employees, but when it comes to any decision you have to make in relation to work – emotions need to be put aside.

If you make decisions based on your feelings, you will act unprofessional. No one likes to do business with those who cannot separate business from personal.

That’s why you mustn’t hire or fire someone because they’re your friend or because you don’t like their attitude about things that have nothing to do with their job. If your justification for such decisions is the desire for the atmosphere at work to be as relaxed as possible, think again.

6. Lacking hierarchy

Precisely for the sake of a more relaxed atmosphere at work, beginners in starting their own business do things wrong. In order to avoid a strict division between the boss and the employees, one goes to the extreme, so there is no hierarchy at all.

This is bad for the business because an atmosphere develops in which no one is in a position to “order”, that is, run the business, because they do not want to hold a grudge against a colleague, that is, the person they hired. How then can the business develop at all if no one manages the company?

As for other mistakes people commonly make when starting their business, here are some examples:

– Charismatic employees

It has become a trend to pay a lot of attention to the charisma of the future employee when hiring new employees. Often this is taken as a more important characteristic of a job candidate than his expertise in a particular field.

However, if you want your business to start properly and start developing into a serious business, your employees must be experts and knowledgeable in their work, preferably with some experience in performing that work.

In this way, your business will start on a healthy footing and will have a better chance of succeeding and “surviving” those critical first years.


Unnecessary spending of money

There are things that you must provide to your workers in the company you are establishing. Of course, the office and workspace must be as organized and pleasant as possible, but some things are really not necessary.

Rest rooms, swimming pools, golf and tennis courts, saunas, and the like are not a necessary part of the business space, nor can this bring you success in business. You only need, to provide your employees with an adequate and adapted office space in which they can work. Because – you are here for work, not for leisure and rest.

– Neglecting the primary objective

The main goal of every business is profit. Without earnings, there is no company.

Beginners in private businesses often do not understand what it takes to make a business successful. The point is not to make a copy of an already existing business, no matter how successful it is. What you start must be unique, at least in some aspects, and in order to be accepted by the public, it must show tendencies towards success, that is, it must have the potential for success.

Leave a Reply


Your email address will not be published. Required fields are marked *

2  +  8  =  

The 6 Biggest Selling Video Games Ever

How Can A Budget Help You – 4 Ways