Starting a new business is one of the most rewarding things you can do, but it comes with legal obligations that are easy to overlook when you are focused on building something from the ground up. At View Ridge Law, we regularly work with entrepreneurs in Seattle and throughout Washington State who have run into legal problems that could have been avoided with the right guidance early on.
There are some important legal pitfalls that new businesses should be aware of. Not getting the proper business licenses you need to operate your business in the state and city where it is located. Not having good contracts in place when hiring employees and working with customers. And not taking the time to properly vet and protect your brand to make sure you are not accidentally infringing on another existing brand. This article covers each of these in detail.
Choosing a Business Name Without a Trademark Search
One thing that frequently comes up in practice is businesses that choose a really unique name in the state of Washington, only to later find that they are using somebody else’s brand and receive a cease and desist letter along with a demand for thousands of dollars in damages.
It is important to be thoughtful when choosing your brand, and not only think about it from the perspective of wanting a cool name. The best practice to avoid accidentally using another person’s brand is to first do a Google search to see what is out there and make sure nobody else is using it. But even if you do not find the name on Google, that does not necessarily mean the brand is not already taken. It is possible that business is not registered online.
It is also important to work with an attorney who can do a comprehensive search through the U.S. Patent and Trademark Office to make sure somebody else has not already protected a similar brand. This step is best taken before you invest in branding, marketing, or signage.
Failing to Register Your Business Properly
If you fail to register your business properly, your business could be on the hook for unpaid business and licensing taxes to the state and city where your business operates.
If your business formation applications are being rejected or if you are having trouble figuring out what steps to take to properly register a business, working with a business attorney can help you get it right from the start.
Relying on Handshake Agreements
Another problem that new businesses frequently face is relying on handshake agreements with vendors and their clients. It is very important that businesses have strong contracts in place with the correct language to ensure that they are getting what they want out of each agreement and to make sure the party they are contracting with is honoring their side of the agreement.
Every business relationship with a client or vendor should be put in writing before work begins. When a dispute arises over what was promised, how much was owed, or whether services were delivered as agreed, a verbal understanding offers no real protection. The cost of having strong contracts drafted upfront is far lower than the cost of resolving a dispute without them.
Getting the Right Legal Foundation From the Start
The mistakes outlined in this guide are all preventable. Getting properly licensed, vetting your brand before you launch, and putting written contracts in place with your employees, clients, and vendors are all investments in the long-term health of your business.
At View Ridge Law, we work with Seattle-area entrepreneurs and small business owners at every stage. If you would like to avoid the common mistakes many business owners face when starting a new business, give us a call and we would love to help you out.
