Starting a Wisconsin Business? Avoid these Legal Mistakes

why do small businesses fail

The first days of a new business are filled with decisions that can make or break a business. Along with a registration process, starting a new business comes with marketing, logistical, and legal decisions. While the latter may not be at the top of a new small business owner’s checklist, legal decisions can have positive and negative impacts on the health of the business. To avoid the negative consequences, avoid these common legal mistakes that small business owners make when starting a business.

Choosing a business entity without considering options

One of the most important decisions for any new business owner, choosing the business entity, has long-lasting legal and financial implications. There are many options, such as sole proprietorship, a limited liability company (LLC), partnership, and corporation. The type of business entity determines required documentation and tax payments, specifics of the resolution of liability issues, and whether raising money is possible. Choosing the wrong business entity can negatively impact both business and personal finances; contact an experienced business lawyer to determine the best business entity for the specific business situation.

Not drafting a partnership agreement

Entering into a business partnership is a common practice that can come with pitfalls, especially when a formal Partnership Agreement is not drafted. The Partnership Agreement is a legal document that should be drafted by a lawyer and customized for every party involved in the business. The document should include financial details, responsibilities of each partner, and information for a smooth conflict resolution and transition (if a partner wants to leave the business). All these details should be on paper; a verbal agreement or the absence of any Partnership Agreement can lead to serious conflicts and legal situations that could have been prevented.

Neglecting to put deals in writing

Documentation with other parties can feel like another unnecessary step, but actually serves as a protective safeguard. This applies even to subcontractors, which is often a necessary part of running a small business. Before subcontracting any work with other parties, contact an experienced business to draft a Confidentiality Agreement that ensures proprietary information is kept confidential and an Independent Contractor Agreement to put details of the arrangement down on paper.

Not establishing a hiring protocol

The hiring process comes with its own set of requirements. Specifically, certain paperwork needs to be obtained and kept on file. A business should also draft an Employee Offer Letter that spells out the details of the job, steps of conflict resolution, and includes any rules or regulations your employees need to be aware of. A few minutes of preparation and research can save a new business owner many headaches now and in the future.

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.

20+ Reasons Your Business Needs a Lawyer

business owners shaking over contract that a lawyer draftedA successful business is started and run with more than just in-depth knowledge of the selected industry. Legal knowledge is an integral part of start-up and day-to-day operations, saving the business from the expenses of a legal mistake or a legal action.

An experienced local business lawyer can be invaluable in many different situations, from navigating local Wisconsin zoning laws to resolving contract disputes. The list of situations that lawyers can assist with are long. This list of legal issues are just a few reasons to contact a lawyer to resolve conflicts and avoid the proverbial legal hot water.

  1. Starting a business (entity selection such as a LLC, LLP, C Corp, etc.)
  2. Purchasing a business
  3. Strategic legal and tax planning
  4. Operating agreements
  5. Drafting and editing by-laws
  6. Change of entity
  7. Buy-sell agreements
  8. Buy-back agreements
  9. Redemption agreements
  10. Drafting legal contracts
  11. Contract disputes
  12. Business torts
  13. Sale and acquisition of business assets and/or a business entity
  14. Business merger
  15. Dissolution of business entity
  16. Distribution of business assets to creditors and stakeholders
  17. Business succession plan
  18. Farm succession plan
  19. Property rental agreements
  20. Land rental contracts
  21. Collecting unpaid bills and debts
  22. Terminating a business

The materials on this website are provided for informational purposes only and do not constitute legal advice. These materials are intended, but not promised or guaranteed to be current, complete, or up-to-date and should in no way be taken as an indication of future results. Transmission of the information is not intended to create, and the receipt does not constitute, an attorney-client relationship between sender and receiver. You should not act or rely on any information contained in this website without first seeking the advice of an attorney.