7 Common Legal Mistakes New Business Owners Make (And How to Avoid Them)

Starting a business is a major milestone—but too many entrepreneurs make legal missteps early on that can cost them time, money, and peace of mind down the road.

As a business law attorney, I work with startups and small business owners to help them avoid preventable problems by setting things up right from the start.

Here are some of the most common legal mistakes new business owners make—and how you can protect yourself and your business.

1. ❌ Not Forming the Right Business Entity

Many entrepreneurs jump in as sole proprietors without considering the benefits—or risks—of formal business structures like an LLC or S-Corp.

Why it matters: Without the right entity, you may expose your personal assets to business liabilities and lose out on tax advantages.

How I help: I guide you in selecting and properly forming the structure that aligns with your goals, growth plans, and legal needs.

2. ❌ Skipping an Operating Agreement or Bylaws

Even if you’re a single-member LLC, skipping an Operating Agreement is risky. It outlines how your business runs and what happens if you leave, grow, or bring on partners.

Why it matters: Without clear internal rules, even simple disagreements can turn into expensive legal battles.

How I help: I draft custom agreements that protect your business operations, ownership, and future.

3. ❌ Relying on Verbal Agreements

A handshake or a quick email exchange might feel easier—but when money, responsibilities, or ownership is involved, you need it in writing.

Why it matters: Verbal agreements are hard to prove and enforce in court. Vague terms can lead to miscommunication or lawsuits.

How I help: I create clear, legally binding contracts that protect your interests and set the right expectations.

4. ❌ Ignoring Intellectual Property

Many business owners forget to legally protect their business name, logo, content, or products until someone copies them—or accuses them of infringement.

Why it matters: If you don’t protect your brand, someone else can. If you use someone else’s IP unknowingly, you could be sued.

How I help: I help you register trademarks, protect copyrights, and avoid infringement pitfalls.

5. ❌ Misclassifying Workers

Hiring someone as a “1099 contractor” instead of an employee might seem easier—but misclassifying workers is a huge liability.

Why it matters: You could face back taxes, penalties, and lawsuits if the IRS or state determines a worker was misclassified.

How I help: I review your hiring practices and draft compliant agreements that reduce risk and clarify roles.

6. ❌ Failing to Maintain Proper Licenses or Permits

Each business and location has different legal and regulatory requirements—many of which go unnoticed until there’s a fine or forced shutdown.

Why it matters: Operating without the right licenses can result in penalties, legal issues, or business interruptions.

How I help: I ensure you meet federal, state, and local requirements so your business stays compliant.

7. ❌ Delaying Legal Help Until It’s Too Late

Too many business owners only reach out to an attorney when something has gone wrong. But preventive legal supportis far more affordable and effective than litigation.

Why it matters: Waiting to fix problems is often costlier than preventing them in the first place.

How I help: I offer proactive, strategic legal guidance to protect your business at every stage of growth.

✅ Let’s Get Your Business Legally Sound

You don’t have to know everything—but you do need the right guidance.

As a business law attorney, I help entrepreneurs and small business owners protect what they’re building, avoid common legal pitfalls, and run with confidence.

👉 Book a consultation today and let’s make sure your business is set up to succeed—legally and strategically.