The Top 10 Mistakes Made When Starting and Operating a Florida Business
That is why we have designed unique Florida business start-up packages that help our clients establish their vision using flat legal fees they can plan for to help avoid the common pitfalls associated with starting a company.
Here is what new business owners need to know to help avoid the top 10 mistakes made when starting and operating a Florida business.
Mistake One: Failing to Register the Business with the State of Florida
All Florida businesses new and existing must register their companies with the Florida Department of State when they are conducting business within its borders.
Failing to do so may result in difficulties establishing a company bank account, which may leave the person or partners personally liable for business debts and obligations.
Mistake Two: Failing to Choose a Unique Business Name
Before you can establish your brand, and register your company with the State of Florida, you must choose a unique business name that does not interfere with the intellectual property rights of a third party.
Simply put, if you choose a company name that is the same or remarkably like an existing brand, you may be required to change it and potentially be held liable for any damages that resulted from your oversight.
Vetting the business name first will save time, money, and the headache of losing your brand equity later.
Mistake Three: Failing to Establish Partnership or Shareholder Agreements
These agreements set forth the expectations for the business and its owners, and include provisions that dictate:
- How business decisions will be made
- How profits will be distributed
- What will happen in the event of a dispute between the parties
- When owners can transfer their business interests
- What will happen in the event of the death, disability, or divorce of one of the partners
At MLG Business Litigation, our skilled Florida business start-up attorneys provide flat fee partnership agreements that will allow you to begin operating with confidence.
Mistake Four: Failing to Adequately Address Accounting and Tax Issues from the Start
Before you can successfully keep track of your business’s accounting needs, including basic accounts payable and receivable requirements, you must determine which documentation method you are going to use.
Whether you prefer to use in-house software, like QuickBooks or something similar, or hire a bookkeeper or Certified Public Accountant to do the work, you must decide before billing customers or paying vendors.
Failing to establish a reliable accounting procedure first can significantly impact your business’s profits, losses, and overall success.
In addition, all for-profit Florida businesses are required to pay local, state, and federal taxes. To avoid IRS penalties, establish a clear and concise accounting process from the start.
Mistake Five: Failing to Separate Personal Accounts from Business Accounts
This one is simple but often overlooked.
If you do not separate your personal financial accounts from your business accounts, you cannot properly shield yourself — or your partners — from personal liability for the activities and actions undertaken on behalf of the business.
That means creditors can hold a shareholder, member, or partner personally liable for the acts of the business.
All businesses should establish a separate bank account — or accounts, when necessary — and any business expenses that must be paid from that account to avoid commingling business funds with personal funds.
Mistake Six: Failing to Comply with Florida Employment Laws
The fines and penalties associated with violating Florida employment laws are significant and can swiftly cripple a start-up’s ability to successfully operate.
The moment your company hires its first employee, the business becomes an employer, you must comply with certain employment laws, including wage and hour, civil rights, and whistleblower laws.
Mistake Seven: Failing to Develop and Enforce Business Contracts
A common Florida business start-up mistake is entering into an agreement with a customer, vendor, strategic partner, or even an independent contractor with a solid business contract in place.
Business contracts outline the expectations of each party involved, specifically identifying each party’s responsibility, the timeline of the agreement, and at what expense.
When no written contract is in place, any person or business can default on the agreement without being held responsible for its breach. This could easily jeopardize your business before you even get started.
Mistake Eight: Failing to Quickly and Accurately Address Business Disputes
Whether it is an intra-office spat between partners or a disagreement between the company and a vendor, failing to assess the complaint and a potential remedy early could lead to lawsuits and litigation.
When the courts become involved, the outcome will be costly. This can cripple a small business from the start.
That is why it is important to have solidly constructed contracts in place that address dispute resolution, so you and your company can mitigate the risk of costly litigation.
Mistake Nine: Failure to Obtain a Required Business License
Not all Florida businesses require a license to operate in the state, but if yours does, you much procure the license before you start conducting business. Failing to do so may result in substantial financial penalties.
Depending on where your Florida business is located, the local licensing requirements may differ. Our skilled Florida business start-up attorneys can help you determine if you need a license, which type(s), and how to successfully file for the proper credentials, so you can get your company off the ground quickly.
Mistake Ten: Failing to Purchase Liability Insurance
When companies do not purchase liability insurance, they are opening the door to lawsuits that may require payment directly from the company, business owner, partners, or shareholders’ pockets.
Do not wait until you are faced with a claim to engage in risk management for your business.
One of the best ways to manage risk for your business is to purchase liability insurance.
Contact Morgan Law Group in Florida Today to Get Started
If you are ready to start a Florida business or need help moving your company to the next level of operation, our skilled Florida Business Litigation attorneys can help provide real-time legal guidance, advice, and solutions.