As an entrepreneur, you may want the legal protection of a corporation. Incorporating comes with the benefit of personal liability protection. And while forming a corporation is easy enough with the right help, you do not want to jump right into it before knowing what you are doing.
Before you start your business, you should learn from the mistakes of others so you do not make them yourself. Here are some things you should avoid as you get your corporation up and running.
1. Not making a shareholder agreement
In the excitement of starting your corporation consumes you, you may neglect to write a shareholder agreement. While focusing on growth is important, you do not want to forget about this crucial agreement. You cannot know what will happen with your shareholders in the future, so it is crucial to outline what will happen when someone wants to withdraw or someone passes away in your articles of incorporation.
2. Using a cheap form found online
According to Forbes contributor Brett Nelson, filing free formation forms you find online is one of the most damaging mistakes you can make when starting a new corporation. These forms often contain provisions that are not ideal for your situation. If you want to make sure everything goes according to plan, avoid free forms like the plague.
3. Not getting help from a lawyer
Nelson mentions this as the number one mistake in his Forbes article. Without proper legal help, you could be putting your new corporation in jeopardy. If you forgo legal counsel, you can easily face financial disaster. Paying some legal fees is far preferable to watching your business and all your cash go down the drain.
These errors can be easy to make if you focus more on profits than anything else. Make sure your formation is airtight and that you handle all the details to operate successfully.