Three Common Practical Startup Mistakes Smart Business Owners and Entrepreneurs Can Avoid
Many articles outline the process of starting up and common legal mistakes. For many small and micro startups, articles about founders stock, vesting, equity allocations and venture capital are not relevant.
Here are three practical mistakes you can avoid:
1. Do not procrastinate. When you receive official notices from the Secretary of State, the Department of Taxation, the IRS or certified mail – open it. Some clients think if you don’t open the letter, you don’t have “notice” of its contents. The exact opposite is true. Proof of delivery means you are supposed to have knowledge of the contents. (Ignorance is no excuse.)
2. Understand pricing and accounting software. Do you understand double-entry bookkeeping, charts of accounts and how to accurately use your pricing software? It’s not always intuitive. I had to pay a lot of money to straighten up Quickbooks my first year in business because I didn’t understand the proper way to enter. Trust Accounting is very specialized and I needed an expert for that. If you are going to use software for estimates, make sure all your underlying assumptions are correct, or you might lose money on every job. This is a good time to hire an expert.
3. Understand the difference between a trade name and a trademark. The Secretary of State’s function is to allow you to register a company name that is at least one letter different from anything else in their database. This is your “trade name.” Your company may offer products or services under this brand name. This is your “trademark.” Proctor and Gamble is a trade name. Crest toothpaste, Pampers diapers and Tide detergent are brand names. If you only check the Secretary of State for name availability, you have only done half of your job, and leave yourself open to trademark infringement. In North Carolina, McDonald’s Restaurant is available for registration, but clearly the double arches would come after restaurateur Angus McDonald for opening McDonald’s Restaurant.