{"id":134188,"date":"2021-12-06T00:00:00","date_gmt":"2021-12-06T00:00:00","guid":{"rendered":"https:\/\/gs:8890\/academy\/the-biggest-legal-mistakes-startups-make-and-how-you-can-avoid-them\/"},"modified":"2023-11-27T14:04:30","modified_gmt":"2023-11-27T14:04:30","slug":"the-biggest-legal-mistakes-startups-make-and-how-you-can-avoid-them","status":"publish","type":"post","link":"https:\/\/www.jpmorganworkplacesolutions.com\/uk\/insights\/the-biggest-legal-mistakes-startups-make-and-how-you-can-avoid-them\/","title":{"rendered":"The biggest legal mistakes startups make and how you can avoid them"},"content":{"rendered":"

Building a startup<\/strong> is an exciting time; a time of opportunity and innovation. Ambitions are high and the future is full of potential. It\u2019s also a time where many challenges can arise and mistakes can be made; mistakes that can have a considerable impact on your business further down the line. \u00a0<\/p>\n

We\u2019ve worked with multiple startups from all around the world, so we know first-hand\u00a0the uphill battle that many founders<\/strong> face in their early years.\u00a0<\/p>\n

And\u00a0we\u2019ve\u00a0seen the\u00a0many\u00a0mistakes\u00a0that they make \u2013 the same\u00a0ones\u00a0repeated time and time again.\u00a0<\/strong><\/p>\n

These mistakes can lead to significant legal complications<\/strong>, the majority of which\u00a0can be easily avoided with the right legal help. The main issue is not having\u00a0this expertise\u00a0from the very beginning.\u00a0\u00a0<\/p>\n

You may be a founder with a life-changing idea, but without the right guidance, you\u00a0could\u00a0be stuck\u00a0spending\u00a0your time\u00a0fixing the issues you once overlooked. And your\u00a0revolutionary\u00a0idea, well it just never gets off the ground.\u00a0<\/p>\n

Mistake #1: Not having a crystal clear business deal with your co-founders<\/h2>\n

One of the most common startups mistakes happens during the formation stage when the business deal is not made clear with co-founders (if any).<\/p>\n

Issues like equity distribution<\/strong>, ownership<\/strong> and roles<\/strong> and responsibilities<\/strong> may seem minor at the beginning when you are focused on developing your idea, but these can have a real impact on your business in the future.<\/p>\n

It\u2019s important to get these terms outlined, in a legal contract<\/b>, from the very start. Just look at Facebook; a Zuckerberg v Winklevoss show-down is something you should want to avoid.<\/p>\n

Mistake #2: Ignoring important tax considerations <\/h2>\n

We\u2019ll be the first to admit\u00a0–\u00a0tax\u00a0can seem\u00a0confusing, but it\u2019s vitally important\u00a0that you stay tax\u00a0compliant,\u00a0or you could end up facing unexpected tax penalties. Typically,\u00a0startups\u00a0make mistakes in the following tax areas:\u00a0<\/p>\n