78

Failure to Have Required Insurance for Employee, including Workers' Comp, Unemployment, and Disability

Why This Mistake Will Hurt Your Business:

Failure to comply with these requirements may result in having to pay interest and catch up on missed insurance payments.

64

Failure to Classify Your Worker Correctly as Either an Employee or a Contractor

Why This Mistake Will Hurt Your Business:

If you misclassify an employee or contractor, that “mistake” could destroy your business as you would suddenly have to account for tens of thousands of dollars that you didn’t budget for to pay back taxes and fees.

63

Failure to Require a Written Agreement with Anyone Who's Created Graphic Design or Copy for You

Why This Mistake Will Hurt Your Business:

Worst-case scenario, the designer could sell all the work they did for you to a competitor, who could use it to destroy all the goodwill you’ve created for your company.

62

Failure to Have Written Agreement with Your Employee or Have Unfavorable Terms

Why This Mistake Will Hurt Your Business:

If you do need one but don’t have one or have a poorly drafted one, then you could have future problems over things like confidentiality, employees poaching customers or other employees, conditions for termination of employment, specific period of employment, hours, and rules and regulations for the office.

61

Failure to Conduct a Patent Search or Conduct a Proper One

Why This Mistake Will Hurt Your Business:

You could waste money on patent fees. Or worse, waste considerable time and resources on a product already patented and not be able to use it.

60

Failure to Enforce Your Patent

Why This Mistake Will Hurt Your Business:

If you don’t enforce your patent, it makes it a lot harder to recover damages. There’s no “Patent Police,” so you need to make sure people aren’t using your patent (intentionally or otherwise) to preserve your rights.

59

Failure to File a Timely Provisional Patent, Whether Early or Late

Why This Mistake Will Hurt Your Business:

If you file too early, your provisional patent could lapse. Too late and your patent could be defeated by others who filed. In other words, no timely filing could equal no patent.

Related mistakes : Failure to Patent Your Product
58

Failure to Patent Your Product When Necessary

Why This Mistake Will Hurt Your Business:

If you don’t patent your product when necessary, you open yourself up to reverse engineering or someone stealing your product altogether.

57

Failure to Understand When You Should and Shouldn't Get a Patent

Why This Mistake Will Hurt Your Business:

If you patent your product and you didn’t need to, you’re wasting a lot of money and also putting an unnecessary “expiration date” on the product. If you don’t patent but needed to, someone could steal your product and exploit it.

56

Failure to qualify for DMCI safe harbors

Why This Mistake Will Hurt Your Business:

You need to understand the background to IP to know when something should have copyright, patent, trade secret, or trademark protections. As we have discussed, not understanding the difference can cause serious problems.

55

Failure to Ensure You Own the Copyrights to Work You Completed or Work You Hired Someone Else to Complete

54

Failure to Protect Your Own Copyrighted Work from Infringement by Third Parties

53

Failure to Register Your Copyrighted Work When Necessary

Why This Mistake Will Hurt Your Business:

Without registration, the most you can do is essentially to send an emphatic letter telling an infringer to stop, but if he doesn’t you wouldn’t be able to go to court and force him to legally stop.

52

Failure to Understand Fair Use and Consequently Infringing on Others' Copyrights

Why This Mistake Will Hurt Your Business:

This can harm your business because once you go beyond fair use in your use of copyrighted material without someone’s permission, you’re infringing on their copyright. And this could lead to serious liability.

51

Failure to prevent your website users from infringing on someone’s copyright via your website

Why This Mistake Will Hurt Your Business:

Failing to prevent or take action on infringement by users on your site may cause you to be held liable for copyright infringement by your users.

50

Failure to Get Permission When You Use Other People's Copyrighted Work

Why This Mistake Will Hurt Your Business:

If you don’t get permission for using another’s copyright, you could be sued for copyright infringement and ordered to not only stop using the copyrighted work but also pay the owner substantial damages.

Related mistakes : Failure to Understand Fair Use
49

Failure to Understand When People Can and Can't Use Your Copyrighted Works for Free or without Your Consent

Why This Mistake Will Hurt Your Business:

It could cause embarrassment and unnecessary expenses incurred from trying to enforce your copyright in cases where fair use was allowed.

48

Failure to Understand What Is and Isn't Copyrightable

Why This Mistake Will Hurt Your Business:

You need to understand the background to IP to know when something should have copyright, patent, trade secret, or trademark protection. As we discussed, not understanding the difference can cause serious problems.

47

Failure to Limit Assigning The "Confidential" Tag to Only Confidential Information

Why This Mistake Will Hurt Your Business:

You have to know what’s confidential and what isn’t to know what info to protect. And you have to protect confidential info for it to be a trade secret. So making this mistake could result in your info not being a trade secret.

46

Failure to Distinguish What of Your Information Is Confidential and What Isn't

Why This Mistake Will Hurt Your Business:

Like many of these trade secret mistakes, you could lose the value of your trade secret if you don’t actually indicate what information is supposed to be confidential.

45

Failure to Understand When Trade Secrets Are Better or Worse Than Patents (AM 45)

Why This Mistake Will Hurt Your Business:

Apart from being precluded from going with the other IP type, this could also cost you years of protection. This is because you’ll lose the value of your IP early if you make the mistake.

44

Failure to Follow the Required Guidelines to Ensure You Have Trade Secret Protection

43

Failure to Understand the Protections Trade Secrets Offer and Don't Offer

Why This Mistake Will Hurt Your Business:

If you make the mistake of thinking that trade secrets are protected from reverse engineering, then the mistake could cost you the value of your company.

42

Failure to Understand What's Required for Information to Be a Trade Secret

Why This Mistake Will Hurt Your Business:

For a lot of new companies, their entire value is in trade secrets. If your information was never a trade secret, then arguably your company would be worth nothing.

41

Failure to Protect Your Confidential Information

Why This Mistake Will Hurt Your Business:

Just like all these other mistakes, it could cost you your business to lose all your trade secret protection.

40

Failure to Create a Strong Trademark

Why This Mistake Will Hurt Your Business:

Without a strong mark, you can’t establish a brand or much goodwill. Customers can’t identify you or distinguish you from the competition if you have a generic name like “Legal Documents, LLC” or “Sales Team.”

39

Failure to Understand Your Common Law Trademark Rights

Why This Mistake Will Hurt Your Business:

Even if you don’t federally register, you can still have common law trademark rights you can enforce against competitors to keep them from stealing goodwill where you’ve already used your mark. But you have to know your rights and enforce them or else it’s “use it or lose it.”

38

Failure to Protect Your Trademark against Infringement

Why This Mistake Will Hurt Your Business:

Three reasons: (1) your mark could be considered abandoned so you can’t stop future infringers; (2) your mark could be weakened or you could lose rights to use it; and (3) you could lose income and hurt your reputation.

37

Failure to Do a Trademark Search on Your Mark

Why This Mistake Will Hurt Your Business:

Because you might have to (1) defend against an infringement lawsuit and (2) rebrand your entire company, losing all your goodwill.

36

Failure to Register or Correctly Register Your Trademark with USPTO

Why This Mistake Will Hurt Your Business:

How much is your branding and goodwill worth? If nothing, it probably won’t hurt your business. But if it’s valuable, then read about how making this mistake could cause you to lose all your goodwill.

35

Failure to Obtain a Seller's Permit

Why This Mistake Will Hurt Your Business:

Without a seller’s permit, you won’t be able to collect sales tax where states require that you do. However, if the state won’t let you collect sales tax, you will still be liable to pay them. As a result, you’ll actually be paying sales tax out of your own pocket.

34

Failure to File Annual Report for Your LLC or Corporation When Required by Your State

33

Failure to Physically and Legally Protect Confidential Information When Sharing with Others

Why This Mistake Will Hurt Your Business:

Similar to Mistake #31, you have to do all these things to ensure your information remains a trade secret. But in this post we give you the exact tips you need to follow to maintain your trade secret status.

Related mistakes : Failure to Use NDA
32

Failure to File and Pay for Sales Tax

Why This Mistake Will Hurt Your Business:

Failing to pay sales taxes could result in you having to pay all the uncollected sales taxes--this could easily make most businesses insolvent. Also, you might have to pay interest. And there’s possible criminal implications.

31

Failure to Prepare a Proper NDA When Dealing with Third Parties

Why This Mistake Will Hurt Your Business:

If you share confidential info without an NDA, the information can immediately lose all its value. Its value was as a trade secret. And information that’s not confidential can’t be a trade secret.

30

Failure to Pay Employment or Unemployment Taxes

Why This Mistake Will Hurt Your Business:

Compounded interest. Failure to comply with these taxes over an extended period can cause you to get hit with a huge tax bill. Also, you could incur fines. And in a worst-case scenario, be prosecuted criminally.

29

Failure to Obtain a D/B/A

Why This Mistake Will Hurt Your Business:

If you’re operating your business under a different name than your own or the entity’s name--without a d/b/a--you could incur penalties ranging from a small fine, inability to enforce contracts, to actual criminal charges.

28

Failure to Obtain Proper Public Safety Requirements, Like Health, Fire, Building, and Zoning

Why This Mistake Will Hurt Your Business:

Failing to have the proper public safety requirements could shut down your business. But of course, chances are if you need one of these, you know about it.

27

Failure to File for Proper Local Licenses

Why This Mistake Will Hurt Your Business:

Not having the right licenses could vary from being something like a $50 fine to something that closes down your business. Usually the failure to have business licenses won’t ruin you, but -- it’s not worth the risk.

26

Failure to File for the Proper State Licenses (Less Common, but Could Apply to Niche Businesses Especially)

25

Failure to File for Correct Federal Licenses

Why This Mistake Will Hurt Your Business:

Violating federal laws would be a disaster for your business. Just imagine if you created a product and had to trash the entire order because it didn’t comply with some law you didn’t know about.

24

Failure to Get an EIN or Fill It out Correctly

Why This Mistake Will Hurt Your Business:

It’s not as much about “getting the EIN” as it is ensuring you’re paying all the right taxes. But usually, getting the EIN is the first step in that process.

23

Failure to Indicate How to Amend Your Company Agreements (including Operating Agreement or Other Inter-Company Contracts)

22

Failure to Have a Dissolution or Liquidation Provision

Why This Mistake Will Hurt Your Business:

You could have a falling out with another owner where they want to shut the business down unilaterally. And you might not be able to stop it without a provision requiring a certain vote percentage to do so.

21

Failure to Appoint a Reliable Registered for Your LLC, Corporation, or Nonprofit Corporation

20

Failure to Update Your Registered Agent Address, Which Later Results in a Lawsuit and You Don't Get the Documents

19

Waiting Too Long to Get All the Company's Agreements Written Down

Why This Mistake Will Hurt Your Business:

If you wait too long, then when you need the contract, it’s too late. No one’s soon-to-be ex-spouse is going to agree to a prenup when she’s about to get a divorce. And no one will agree to a contract after the conflict has already occurred.

18

Failure to Register as a Foreign Entity in Other States or Registering When You Didn't Need To

Why This Mistake Will Hurt Your Business:

If you don’t register when necessary, you could be hit with substantial back taxes, penalties, and not be able to sue anyone in that state that wronged your business. If you register unnecessarily, you’re paying way too much.

17

Failure to Do the Right Corporate Formalities for Your Company

Why This Mistake Will Hurt Your Business:

Corporate formalities are in part (1) required by law and also (2) great for proving who’s made what decisions. Without them, you could have no written proof of what everyone’s agreed to, and you could be subject to increased liability.

16

Failure to Conduct the Correct Post-Formation Legal Issues For Your Corporation

Why This Mistake Will Hurt Your Business:

Just like with LLCs, there’s probably hundreds of ways overlooking some of these mistakes could destroy your business. And corporations make the same 3 big mistakes regarding taxes, corporate formalities, and licenses and permits.

15

Failure to Conduct the Correct Post-Formation Legal Issues for Your LLC

Why This Mistake Will Hurt Your Business:

There’s probably hundreds of ways overlooking some of these mistakes could destroy your business. But the three biggest mistakes are overlooking specific taxes, forgetting corporate formalities, and not having the right licenses and permits.

14

Failure to Check Your State to See If Someone Has the Company Name You Want

13

Failure to Set up the Right Tax Entity for Your Business: Delay in Filing Appropriate Tax Documents

12

Failure to Set up the Right Tax Entity for Your Business: Not Knowing You Have a Choice as to How Your Company Will Be Taxed

11

Failure to Set up the Right Tax Entity for Your Business:Not Knowing the Limitations of Each Entity

10

Failure to Select the Right Tax Entity for Your Business

Why This Mistake Will Hurt Your Business:

In a nutshell, you may have to pay a lot more taxes if you choose the wrong entity. Also, investors might not be as interested in your company because of reasons like -- they might have to file a bunch more state tax returns if you pick the wrong entity.

9

Failure to Set up the Right Entity for Your Business: Not Factoring in Investors or Equity Compensation When Making Your Entity Choice

8

Failure to Set up the Right Entity for Your Business: Not Choosing or Choosing Nonprofit When Other Entities Were a Better Fit.

7

Failure to Set Up Your Entity In the Right State

Why This Mistake Will Hurt Your Business:

In most cases, it’s not going to have a material impact on your business. But sometimes you hurt yourself by having to pay high setup and annual fees in two states rather than one.

6

Failure to Set up the Right Entity for Your Business: Choosing LLC When Corp Was the Better Entity

5

Failure to Set up the Right Entity for Your Business: Picking an Entity When Being a Sole Proprietor Makes the Most Sense

Why This Mistake Will Hurt Your Business:

It’s not a huge deal. But, if you’re starting your business on a microscopic budget, every dollar counts. And if you just have this business as a hobby with no liability risk, losing those extra dollars can be pointless.

4

Failure to Select the Right State Law Entity for Your Busines

Why This Mistake Will Hurt Your Business:

Besides the possibility of tax concerns, choosing the wrong entity can cause management issues, make it harder for people to invest in your company, cause complications when trying to issue equity to other owners, and a myriad of other reasons.

3

Failure to Keep Your Business Finances Separate from Your Personal Finances

Why This Mistake Will Hurt Your Business:

You could lose all your liability protection. To keep that protection, you have to follow certain procedures, one of them being a requirement to keep your business finances separate from your personal ones.

2

Failure to Assign IP to Your Company

Why This Mistake Will Hurt Your Business:

This mistake could cost you your entire value of your business. Imagine if a co-founder or contractor created the IP you thought your company owned. Then you got in a dispute and found out they owned everything, the company owned nothing.

1

Failure to Set up Your State Law Entity

Why This Mistake Will Hurt Your Business:

Without an entity, you could incur personal liability that could otherwise be avoided. You won’t be able to “pass on” your business if something happened to you. And your business won’t get as much credibility as it deserves.

0

Why Using Google for Legal Problems Will Kill Your Business

Why This Mistake Will Hurt Your Business:

It causes you to make avoidable legal mistakes. You might find legal answers for what you’re looking, but it’s the legal problems you never to knew search that often will destroy your business.

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