Using the Wrong Business Entity. Various circumstances dictate the most appropriate entity for a particular business. Future needs or plans for financing are crucial in choosing the best entity. Usually, avoiding strange equity classes in any business entity is wise. Ignoring Employment Policies and Procedures.
Significant costs can arise from violating employment laws.
Certain violations can result in treble damages. Additionally, wrongful termination, sexual harassment, and discrimination claims can be costly to defend and can create issues that will discourage potential financing or an equity securities offering. Fortunately, many employment problems can be avoided by adopting and strictly following an employee policy manual. Employment agreements and noncompetition agreements for key employees, and confidentiality agreements for all employees, are also valuable. Not Documenting Actions and Transactions.