Business Lawyers Blog
Starting a small business in Oregon presents a range of legal and operational challenges. While a strong business concept and capable team are important to long-term success, proper legal planning is equally essential. Overlooking key legal requirements or making common compliance mistakes can expose a business to unnecessary risk, regardless of how promising the business plan may be. Below are several legal pitfalls that many small businesses encounter. Businesses facing these issues may benefit from consulting with Structure Law Group and speaking with an Oregon business litigation lawyer.
Choose the Correct Oregon Business Entity
The business entity chosen at formation can have significant legal and financial consequences as the company grows. For example, general partners in a partnership are personally liable for partnership debts, while members of a limited liability company (LLC) typically receive protection from personal liability. Understanding how different business structures allocate risk is an important step when bringing a business idea to market.
Avoid an Unclear Legal Structure
Many startups begin with only a couple of people. But it’s still important to create detailed agreements, whether bylaws, partnership agreements or LLC operating agreements because these agreements clarify each owner’s role and duties. For example, a general partner can bind the partnership and individual partners to a contract, whether the contract is advantageous or not. You might want to limit this ability in a partnership agreement or form a Limited Liability Partnership if permitted.
SLG Attorneys can draft:
- Shareholder agreements
- Operating agreements
- Bylaws
- Partnership agreements
These agreements also clarify what happens when a founder wants to leave. That happens more commonly than you would imagine, even early in the life cycle of your startup.
Weak Contracts
Contracts form the foundation of a business. A contract should be carefully drafted to provide protection if the business arrangement or agreement falls apart. Litigation is costly and could be fatal for a new startup that might not survive a lawsuit.
Connect with an experienced Oregon business contracts lawyer to review:
- Licensing agreements
- Employment contracts
- Vendor contracts
- Assignments
- Delegations
- Agent and independent contractor agreements
Considerations in contracts include choice-of-laws clauses, alternative dispute resolution, and risk allocation. Non-lawyers often overlook these clauses. A templated fill-in-the-blank or ChatGPT contract from the internet might not provide the necessary protection.
Overlooking Compliance and Tax Obligations
Many startups are unclear on their tax obligations, but you are encouraged to plan for these deadlines and obligations from Day One.
Here are some compliance issues that arise:
- Failing to pay excise and income taxes. The state can sue you or even move to shut down a business that does not pay required taxes. Even worse, you could be inviting an investigation for tax fraud.
- Ignoring local regulations. A small business needs to meet both state and local regulations. Some cities have permitting requirements that differ by location.
- Failing to secure the correct business license.
- Not buying required liability insurance or purchasing too little to protect your business.
Speak with an Oregon Business Lawyer
Structure Law Group understands the importance of legal compliance. Let us sweat the legal details while you remain focused on sharing your business vision. Contact Structure Law Group in Oregon to schedule a meeting with an experienced business lawyer.