5 Legal Mistakes Start-Ups Make (and How to Avoid Them)

Starting a new business is exciting- you've got the vision, the drive, and maybe even the location or first customers lined up. But too often, entrepreneurs overlook the legal side of things until it’s too late. At R/A/Z Law Group, we’ve seen firsthand how avoidable mistakes can derail even the best ideas.

Here are five of the most common legal pitfalls we see, and how you can steer clear of them.

1. Not Choosing the Right Business Entity

   LLC, corporation, partnership- each option comes with different tax implications, liability protections, and ownership structures. Picking the wrong one can cost you time and money down the road. The good news? With proper guidance, you can set up the entity that protects your personal assets and fits your long-term growth plans.

   
   

2. Signing a Lease Without Legal Review

   Leases for businesses, especially healthcare practices or franchises, are not “standard” documents. They often include hidden obligations, tricky renewal terms, or landlord-friendly clauses. A poorly negotiated lease can eat away at profits or lock you into terms that limit your growth. Always have a legal team review (and negotiate) before you sign.

   
   

3. Skipping Written Agreements With Partners or Associates

   It’s tempting to rely on handshakes or verbal agreements when you’re starting out, especially with people you trust. But as soon as money, time, or ownership are on the line, clear contracts are essential. From partnership agreements to associate contracts, having everything in writing prevents misunderstandings and protects relationships.

   
   

4. Ignoring Industry-Specific Rules

   Healthcare providers, franchisees, and certain service industries face unique regulatory requirements. Compliance issues may not show up immediately, but when they do, they’re costly and stressful. Proactive legal planning helps you stay ahead of rules and avoid costly fines.

5. Overlooking Financing Pitfalls

   Whether it’s an SBA loan, franchise financing, or industry-specific lending, the terms of your loan matter. Some agreements include hidden fees or restrictions that can make it harder to grow. A legal review ensures you know exactly what you’re signing.

Don’t let avoidable mistakes threaten your hard work. At R/A/Z Law Group, we help start-ups and small businesses build on solid legal foundation so you can focus on growing with confidence.

Ready to launch? Contact us to schedule a consultation about your business structure, lease, or contracts.