10 most common mistakes entrepreneurs make

1. Not involving legal counsel from the beginning.

2. Working with partners without registering a company.

3. Intellectual Property - Business owners need to own what they are selling. Mistakes include not obtaining the assignment of invention from co-founders, employees, contractors; failing to check employment contracts with former employers; investing in a brand without properly securing a name or logo and protecting it.

4. Founders Agreements - It’s vital to establish the allocation of the company’s interest early to avoid misallocation between workload and ownership share as well as to avoid disputes & protracted litigation later. Beware absent vesting provisions.

5. Assuming that raising capital from friends & family does not invoke security laws.

6. Equity Grants - Equity must be established as soon as the business is formed, cannot grant equity without proper documentation.

7. Early tax election - If founders or employees shares are subject to vesting and 83(b) is not filed, a business and the grantee will be taxed at ordinary income rates when the value of their share grows

8. Employment matters - Must be aware of legal hourly and wage requirements and understand the difference between the employees and independent contractors.

9. Using online legal forms like ZocDoc or LegalZoom – they are the simplest standard versions not suitable or adjusted for a present-day startup entity. 

10. Failing to properly document customer, employment and other key third-party relationships. In the US oral contract is enforceable by the courts. Misunderstandings may result in the protracted and expensive litigation.

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