What does this mean?
If you have an LLC then you at least filed the right document with your state. But there’s a lot of other legal issues you still need to consider that many people overlook. In particular, three big things to think about are taxes (not just income, though); corporate formalities, and having the right licenses and permits.
Does this apply to me?
Yes. There’s at least a few post-formation legal issues that applies to everyone.
How could making this mistake destroy my business?
There’s probably hundreds of ways overlooking some of these mistakes could destroy your business. Each mistake is its own animal.
Overlooking certain taxes could cost you substantial fines and, worst-case scenario (although unlikely), imprisonment.
Forgetting corporate formalities could result in your business losing its liability protection. Or you could experience problems where a co-owner says you all agreed on something that you say isn’t true (but you have no documentation to prove otherwise).
Because the list of legal issues is too numerous to cover in this blog, you should check out our actionable checklist of steps to take after organizing we’ve created to help you issue spot everything.
Will had a company that sold a product, Sales 4 Kidz. The product was a game for children that taught them how to be better salespeople. William started by selling the product to friends and family and a few local daycare centers. One of the children from the daycare center who was playing the product started choking on one of the money pieces and his parents sued Will and his LLC for negligent design of the product.
The Consumer Product Safety Commission, a federal agency, found out about all of this and sued WIll as well for failing to comply with the requirements necessary for children’s games. Then WIll’s city and state, Saint Louis and Missouri, found out Will hadn’t collected sales taxes and sued Will for back taxes and punitive fees. All these agencies could do this because Will was selling goods that needed to comply with the CPSC and needed to collect sales taxes when he sold his product.