Here Are Common Legal Mistakes Business Owners Make

Entrepreneurs are known to be busy and passionate people. They are always focused on a lot of things with their business, especially when it comes to marketing their services and products. Of course, they are also busy spreading their business brands to a lot of market.

But because of their business, they sometimes forget things and tend to make legal mistakes. This can cause them to be frustrated, especially if the mistakes are legal ones. So I’ve rounded up the common legal mistakes that you should be aware of so you know what to avoid and ensure that you won’t commit mistakes.

1. Not Setting Up the Right Business Structure

Remember that in a business, there are corporations, partnerships, S corporations, LLCs, and sole proprietorships. So it is important to get to know each of them, and so you can know which one is perfect for your business. If you choose the sole proprietorship, then this means that you are just one, the sole owner of the business. So if you get sued, your business might be at risk, including all of your personal assets.

2. Not Hiring A Lawyer

Business owners, especially the solo and partnerships, think that they no longer have to hire a lawyer for their business. They also think that they have the same obligations when it comes to their enterprises. The problem is, hiring a lawyer, whether you are a sole proprietorship or not, is ideal. The reason behind this is because there are legal issues that a lawyer can help you. So it would be best to hire a lawyer at the very beginning of your business.

3. No Privacy Policy

Another common legal mistake is that some businesses forget to have a privacy policy. This policy will let the customers know which information will be shared and which ones won’t be shared. One thing that you need to know is that the privacy policy should always be publicly

4. No Terms and Conditions

If you have a website, you need to make sure that the site has terms and conditions policy. This is an agreement that guests and your customers should agree on before using or purchasing any services or products. You might get a lawsuit if there are no terms and conditions where your customer can agree on. So always make sure to have this policy on your website even before putting it live.

5. No Proper Employees Documentation

Put in mind that the federal law will need you to have copies of documentation on file for each of your employees. Now, if you forgot to this and you get caught, your business can be closed down, and if you are unlucky, you might even go to jail.

6. Incomplete Contracts with Third Parties

When using services or purchasing certain raw materials from a third party, you need contracts for that. Whether you are a tenant or the owner of the business, you need to establish legal documents that state the rules for the occupancy. It is best to never create an agreement without any legally-binding agreement. Hiring a good lawyer will help you in drafting the contracts for instances like this. Avoid relying on the internet because anyone can just draft out a contract, and you may never know if it’s complete or not.


These are some of the most common legal mistakes that business owners make at the beginning of their business ventures. Keep the information above in mind, so you can avoid committing them. It’s always nice to start a business without thinking about any problems or things that you might have forgotten.

Based on Materials from Entrepreneur
Photo Sources: Tax Defense Partners, Smithsonian Magazine, Choose