5 legal mistakes startups make after inception and how you can avoid them | e27

I get it-you’re excited about your startup and you can’t wait to get it off the ground. But there are a lot of mistakes you’re making that can land you into legal trouble. And guess what? The continuity of your business depends on whether or not you’re in compliance with the law.

If you are serious about building a startup that won’t fail, then you are in luck. In this article, I am going to walk you through the most common legal mistakes startups make so that you can spot them on time and avoid them.

Mistake #1: Thinking that working with a lawyer in the early stages of the business is unnecessary

Yes, so much is said about law and lawyers that you may feel a bit intimidated by their presence or maybe even apprehensive. But as a startup, one of the grave mistakes you can make is to not have a lawyer you can consult from the initial stages of your business.

So, hire a lawyer who will be there for you when you want to take any decision that will affect your business and ensure that your rights and interests are protected.

Mistake #2: Failing to register the name of the business

So you’ve got a pretty swanky name that you love the ring of. And maybe you’ve told your friends, family and future prospects the name of your business. Or maybe you went further to design and print business cards and even launched a website. Then the bomb drops:  you find out that an older business is using the name that you wanted to use.

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It’s literally heartbreaking when you see someone else using your world-class business name. But the only way to ensure that such a thing doesn’t happen is to register your business name. Sadly, some people still see their business as a hobby, so they go the longest time without registering their business name.

When you initiate the process of registering the name of the business, one of the processes you’ll encounter is a name check. At this stage, you’ll be able to know if the name you want to use for your business exists or not. If it does, then you will have to use an alternate name for your business. However, if it doesn’t, then you will be allowed to proceed with the business name registration process.

Mistake #3: Overlooking the need to have a non-disclosure agreement

For the purpose of getting advice, engaging the services of professionals or hiring people, you will have to share some information about your startup. However, sharing this information could put your startup at risk of having its ideas stolen or leaked to people who aren’t meant to hear such information. Yes, these things happen in real life.

In such a case having a non-disclosure agreement (NDA) that the person you want to share business information with can sign will ensure that such information remains confidential. In the event the person breaks this agreement and shares such information, you will have the cause to sue them for breaking such agreement.

Mistake #4: Not doing anything to protect your intellectual property

If your startup has created a unique technology or product and you’ve done nothing to protect it from being stolen by someone else, then you’re making a fatal mistake. And you guessed it – the need to protect the startup’s intellectual property rights eludes some startups.

When it comes to protecting the intellectual property rights of your business these are some of the protective measures you should take:

1. Patents – protects your invention and prevents others from reproducing, using or selling the same invention.

2. Trademarks – protects the distinguishing symbol or name that your business is identified with. Good examples of trademarks are the words “Coca-Cola” or the tick symbol of Nike.

3. Copyright – protects the original creative work like videos, music, art or books. This right gives you exclusive rights to lawfully make copies of your work or sequels of it.

Mistake #5: Keeping yourself vulnerable without a standard contract

A lot of startups have fallen in situations where clients hire their services only for their clients to fail to pay on time or have a disagreement on your rates and how the project was meant to be like. More often than not, it can get pretty messy.

Also Read: 5 mistakes to avoid when building a business from scratch

With a standard legal contract, both you and your clients will be clear on the terms of engagement.

Such a contract will ensure everyone knows what their rights and obligations are to each other and cancel any doubt as to what is expected from the outcome of the contract. It’ll give you the needed protection when it comes to delivering your services to the client.

Time to turn a new leaf

This article might have put you on the spot in some areas, but I promise it’s for your own good. Now that you know that you should register your business and protect your intellectual property and your business interest and of course, the most important of them all: hire a lawyer. Its time to makes some changes.

Honesty hour: Are you guilty of making any of the legal mistakes we mentioned?

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Image Credit: Helloquence

This article was first published on October 18, 2019

The post 5 legal mistakes startups make after inception and how you can avoid them appeared first on e27.

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