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March 9, 2022 | BusinessFloridaFrom the blog

5 Legal Mistakes to Avoid When Launching Your Startup Company in Florida

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Starting a new business is an exciting endeavor and Florida is a great place to do it, as it has one of the largest state economies in the nation.  The best way to ensure your company succeeds is to lay the proper groundwork.  Here are several common legal mistakes to avoid when launching a company in Florida:

Mistake #1. Picking the Wrong Business Entity

It is good practice to set up a separate legal entity for your new business.  Setting up the appropriate business entity will help shield you from liability as well as laying the proper foundation for your business.

There are many different types of business entities including, Sole Proprietorships, Partnerships, Limited Liability Company (LLC), C-Corporations or S-Corporations.  The level of protection you receive from personal liability, your taxes, your control over the business, the structure and management of the business, funding of the business and compensation of you and other owners varies between entities.  It is essential to get skilled legal and financial advice to help you make the right decision based on the priorities and goals for your business.

Once you make a selection, you must comply with the relevant requirements for establishing and maintaining the business under Florida law.  This may include registering with the state, filing certain documents with the IRS for tax purposes, obtaining a business license or relevant permits and other rules.

Mistake #2. Failure to Protect Intellectual Property

No matter what type of business you have, you are likely to have intellectual property that requires protection.  You should speak to an attorney regarding registration of trademarks, copyrights and patents with the U.S. Patent and Trademark Office and U.S. Copyright Office.  Also, consult an attorney regarding federal and state laws protecting trade secrets.

Legal agreements can also help you secure your intellectual property rights.  For instance, if employees or independent contractors create intellectual property for you, you would do well to have an agreement assigning those rights to you (known as a “work-for-hire” agreement).  Confidentiality agreements can ensure that your company has additional recourse against anyone who reveals confidential information you gave them.

Protecting the business’ intellectual property rights is essential for building and creating value for your brand.  Making sure your intellectual property is properly registered can protect you from other businesses attempting to “pass off” your brand as their own, which can negatively impact the value or reputation of your business.

In addition, you must make sure that you are not inadvertently infringing on someone else’s intellectual property.  This is essential to avoiding lawsuits.  It is also important because you don’t want to invest in building your brand and all your activities because you are liable for infringement.  An attorney can conduct searches of the relevant government databases to determine if anyone else has similar intellectual property. 

Mistake #3. Not Having the Appropriate Agreements in Place

In setting up your new business, it is important to have a formal, written agreement that sets forth the expectations for operation of the business. Depending on the type of entity you select, you may have an operating agreement, partnership agreement or shareholder agreement.  The agreement should discuss issues such as the roles and responsibilities of owners, decision-making (voting and dispute resolution), capital contributions, compensation of owners who work for the business, death/buy-out of an owner and dissolution of the business.  The goal is to outline how the business will be conducted to avoid future disputes that could hurt the company and owners.

In addition, employment and independent contractor agreements, sales and service contracts, indemnity agreements and other contracts should be drafted by an attorney to ensure the business is protected to the greatest extent possible.  Without strong written contracts that clearly define the agreements of each party, it can be difficult to enforce the rights of your business or defend claims against the business.

Mistake #4. Failure to Create a Privacy Policy

It is likely that your business will have a website.  That means you must have Terms of Service (also referred to as Terms of Use or Terms and Conditions).  This should be available on your website and explain to users what uses of the website are authorized or not, any limitations on your liability and how any disputes that arise may be resolved.  In addition, your site needs a privacy policy that details what data the website collects from visitors, how the website will use that data and how that data will be shared with any third parties (and the identity of those parties).  Providing website visitors with easy access to information regarding the terms of service helps to mitigate or avoid future legal claims against your business regarding terms of service or privacy.

Importantly, there are international, federal and state privacy and data security laws you may have to comply with, and these laws change regularly.  An attorney can review your anticipated business practices, advise what rules apply and create a strategy to ensure you adhere to all legal requirements.

Mistake #5. Not Working With a Knowledgeable Florida Business Attorney

When you operate a business in Florida, you have to comply with state law.  An experienced Florida business attorney can guide you in setting up your business properly, explain what laws and compliance requirements apply to your business and help you take proactive steps to avoid mistakes that can cost you your business.

Photo by NeONBRAND on Unsplash
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