When starting your business in Massachusetts, there are several costly mistakes you might make, considering that you are treading a foreign path. Among those traps, legal blunders are one of the most consequential mistakes you can find yourself in. Read on to familiarize yourself with how to avoid some legal pitfalls common among startups.
Not protecting your intellectual property
Patents are essential because they protect your idea, process, services, products and technology from being copied or sold to someone else without your permission. Besides a patent, a federal trademark can protect the unique identifiers of your products or services from other businesses.
Failing to comply with securities laws
Any investment made to your business, including those from your friends or family, must comply with Massachusetts and federal security laws. Basically, you should register any security you have sold to the public with the U.S. Securities and Exchange Commission and then avail this information to your investors.
Lacking a formal business entity
Failing to have an appropriate business structure could be very consequential, especially in a lawsuit, bankruptcy or other legally related circumstances like taxation. You can take up any form, including a limited liability company, limited partnership, general partnership, C or S corporation, or sole proprietorship, but it’s important to ensure that you have an admissible business structure.
Not making a clear deal with your co-founders
If you are starting a business with another person, you must clearly state the terms of your founder agreements. For example, you should define the roles and responsibilities of each founder, the percentage you each own in the business, how to make critical decisions about your business, how to handle a founder who wants out, the remuneration terms for the founders, etc.
Not hiring an attorney
Every business is unique with distinctive legal requirements. You might deal with several complicated legal issues, and knowing everything you need to do while pushing toward your goal can be difficult without professional help. To make things easy and avoid falling into legal traps, you may want to hire someone to counsel you right from the start of the business.