Inc.com published an article today entitled, “The Dumbest Legal Mistakes Early Startups Make.” The article, written by Alumnify CEO A.J. Agrawal, asserts that the “dumbest” legal mistakes made by startups include:
1. Not having written LLC operating agreements
2. Choosing the wrong corporate entity
3. Failing to keep proper records
4. Using someone else’s legally protected name
5. Commingling accounts and money
6. Not protecting intellectual property
7. Failing to take into account employees
8. Not thinking about state laws
I agree with these as common mistakes, but I think there are many others too:
9. Choosing a company name that is not easily protectable
10. Not having founders’ agreements
11. Failing to comply with state and federal securities laws when issuing equity to co-founders, angels, etc.
12. Not having a vesting schedule when issuing equity to co-founders
13. Failing to create a proper HR infrastructure
14. Failing to create and use standard form contracts written to benefit the startup
15. Not having a solid startup team in place from the beginning (lawyer, accountant, banker, insurance broker, etc.)
You can find the Inc.com article here.
