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Everywhere you look, a new startup attempts to make a big splash with a game-changing concept. However, only those who can put that notion into reality will be successful in business. Having a sound legal framework in place can help you avoid costly mistakes and save time and worry in the long run.

Many entrepreneurs struggle to create such systems because they are unaware of the most typical blunders made by new businesses. It simply takes a little self-awareness and planning to avoid these hurdles, so keep reading to learn how to avoid the five most common legal blunders made by startups.

Handling legal responsibilities without expertise

As an entrepreneur, you're one of those people who take charge of their destiny. If something needs to be done for your new company, you'll do it. It's easy to consider your laptop as your lawyer when you combine that can-do mentality with the seeming ease and affordability of do-it-yourself legal procedures and paperwork. However, saving a little money upfront by not hiring an experienced small company lawyer can end up costing you a lot more in the long term.

Lack of a proper structure

Forming a corporate entity may seem like an unnecessary hassle, especially for lone entrepreneurs whose firm begins and ends with them. The reality is that by forming a corporation, whether an S-corporation, a limited liability company, a general or limited partnership, or any number of specialized entities, you can protect your assets from business liabilities, reduce your tax liabilities, and take advantage of other legal benefits.

Roles and obligations that aren't specified

While you and your partners all want your new business to succeed, neglecting to identify the roles each of you plays in the company — who owns what, who does what, and who controls what leads to conflicts and uncertainty. A shareholder agreement or written partnership spelling out each owner's rights and responsibilities is mandatory in this case.

Stepping on someone's intellectual property

You've come up with a game-changing concept, a catchy business name that will stick in clients' minds like glue, and a memorable logo. You must ensure that you are not infringing on someone else's intellectual property before investing your effort and money in any of these.

To guarantee that your company's operations and branding do not entitle you to infringement claims or require you to make disruptive and expensive modifications down the future, it is best to connect with an expert property lawyer.

No exit plan

Just as you might not be thinking about divorce on your wedding day, how you or the partners will leave your business behind may be the last thing on your mind while you are launching the firm. However, over time, company partners may grow apart or have different perspectives and ambitions, and they may decide to part ways or cash in their chips.

It's critical to understand how and when business owners can sell their shares, how much they should be paid, and who can buy a position in the company. Prepare a buy-sell agreement with your attorney that tackles these back-end difficulties upfront to ensure smooth transitions in the future.


With so much to do and so many other things to worry about as you try to get things off the ground, enlist the help of someone who can give you peace of mind and make sure you're on the right track. The Rasma Legal team is the perfect choice in this case. They are a team of incredibly knowledgeable lawyers who can ensure that you don't end up making mistakes that can cost you the sustainability of your business.

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