Top 5 Legal Mistakes made by Startups Business Owners
                     Top 5 Legal Mistakes Made 
by Startups Business Owners
1. Incorrect Legal Structure Of The New Business
● The legal form of business chosen has a bearing on the funding choices for the corporate, 
its tax responsibilities, and therefore the personal liability of the homeowners.
● The correct format will facilitate save taxes still as shield the non-public assets of the 
proprietors in times of crisis.
● Investors also want to ensure that they are funding a dependable entity which makes it 
necessary to hire experts to identify the most suitable legal structure for the new entity.
2. Absence Of A Founder’s Agreement
● The founders UN agency ar instrumental within the beginning of the new company may 
also cause its closure.
● The closure will happen within the case wherever the roles and responsibilities of all the 
co-founders haven't been delineate clearly.
● A founder’s agreement that clarifies the possession of every member at the side of their 
duties towards the organization should be framed right at the start.
3. Not Having Proper Licenses
● Businesses must know the licenses and permits they need to have in order to 
function without trouble. Non-compliance with regulations can have serious legal 
ramifications for an organization.
● Company homeowners should interact lawyers to grasp concerning all the legal 
permissions they have to possess so as to run their organization.
4. Ignorance Of Applicable Tax Laws
● The cognitive content of relevant tax laws is that the reason behind one in every of the 
foremost important legal risks round-faced by startups.
● Enterprises should understand applicable taxes and therefore the varied returns to be 
filed within the jurisdiction wherever they're set.
5. Improper Documentation Used For The Sale Of 
Shares
● Using improper documents to formalize such agreements will simply cause legal 
troubles.
● The sale of stocks to investors is guided  by the securities laws that have their own 
revealing and filing needs.
● Properly written shareholder’s agreements covering all the aspects of the sale should be 
noninheritable from knowledgeable consultants to avoid this hazard.
Source
URL: 
https://readwrite.com/2019/03/03/8-major-legal-risks-faced-by-startups/
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