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.
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.
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.
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.
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.
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.
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.
If you don’t patent your product when necessary, you open yourself up to reverse engineering or someone stealing your product altogether.
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.
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.
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.
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.
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.
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.
It could cause embarrassment and unnecessary expenses incurred from trying to enforce your copyright in cases where fair use was allowed.
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.
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.
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.
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.
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.”
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.”
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.
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.