3 legal issues you may encounter when starting a business

On Behalf of | Nov 1, 2017 | Blog

If you are finally getting around to starting that business in Pittsburgh you have long been thinking about, there are some things you need to take into consideration first.

Starting a business is one of the most rewarding ventures you can ever undertake. However, if you do not plan things right and set it up properly, it could become a stressful and overwhelming experience that could leave you full of regret. Before you get carried away with ideas for your company, take some time to review the legal mistakes you should avoid. 

Not having a co-founders’ agreement 

It is one thing for you to have a verbal agreement with your co-founders. But if you do not have it in writing, any of them, including you, could violate the arrangement and cause problems for your company. A good co-founders’ contract outlines all processes for disputes and defines roles and expectations. 

Improper business formation 

Business formation is often one of the trickier aspects of starting a company. There are several formations to consider, and not all of them are right for your situation. It is important for you to consider your current and future business goals and tax needs when deciding whether to establish your company as an LLC, C-corporation or S-corporation. 

Not properly classifying employees 

Many small businesses do not have much cash flow or funds to support their staffing needs. It is not uncommon for a company to hire workers on as contractors. If you decide to hire contractors, make sure you review the terms of their contracts and work schedules and ensure they meet employment laws. If you allow or require your workers to work as employees without classifying them as such, you risk violating the law and receiving fines and other adverse legal actions. 

There are many things that can trip you up during the business formation stages of starting your company that could cause you to have legal problems in the future. Taking precautions such as consulting with an attorney can help ensure your business gets off the ground right. 


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