Six Legal Mistakes Businesses Make
Let’s be real: the legal stuff is complicated.
LLCs. DBAs. Trademarks. Copyrights. It’s a lot to learn.
So here’s a quick list of what not to do…
1. Don’t register an LLC without checking to see if the trademark is available.
A Trademark is the exclusive right to use brand.
The bad news is that plenty of names are already taken. Meaning someone else owns them and they are the only ones who can use them.
So before you file an LLC for that name, check to see that you can use it first.
It’s easier to do this from the get-go.
2. Don’t register an LLC without knowing the cost.
LLC registration fees vary from state to state.
Most of the time, they’re affordable. For example, a filing in Ohio is $125.
But in California, it costs a minimum of $800 a year.
Do some Googling first and make sure you can afford it.
3. Don’t assume you need a DBA.
A DBA, or a Doing Business As, tells the public that you’re running a business under a certain name.
But it's only needed in a few situations:
If you don't want to register as an LLC (or Corporation) and your business name is different than your personal name.
If you registered your business as an LLC and your brand name is different from your LLC name.
No worries about getting a DBA if you're running a business under your own name and are not registered as an LLC OR if your business name and LLC match.
4. Don’t skip a Trademark because you have an LLC or DBA.
Trademarks, LLCs, and DBAs are very different things.
A trademark is the exclusive right to use a brand. It’s the only way to stop competitors because it means no one else can take your name.
An LLC and/or DBA has nothing to do with protecting your name. It just registers your business for liability purposes with the state. It’s true that no one in your state can use your exact LLC name, but what about people in different states? Or people with really similar names?
That’s why a trademark is important!
5. You probably don’t need an S Corporation from day one.
An S Corp is a tax designation that you can add to your LLC or C Corporation. It generally saves you money on taxes.
But it only makes sense if your business makes at least $50-$80K per year because you have increased costs with hiring an accountant and paying yourself a certain way.
6. You don’t always need to register in Delaware.
Delaware gets a lot of buzz as the place to register.
But here’s the deal. Delaware has more favorable laws for investors. So corporations who are looking for investors pick Delaware. That’s the only reason why you’d want to register in Delaware, unless you live there.
But the downside is that you always have to register where you operate your business. So if you’re operating somewhere else, you’ll have to register there too. And the cost of registering in two states is expensive.
So going this route only makes sense if you're looking for funding.
You’ll learn when you need a DBA.
You’ll learn how to file an LLC step by step.
You’ll learn about business licenses, sales taxes, and s corps.
Plus it's affordable ($19) and it's everything you need to start your business legally.