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Ten Mistakes All Business Owners Should Avoid – Mistake Number 2

T. Randolph Catanese, Esq. © 1998  

Mistake No. 2 – The Paperwork Exists But It is Wrong. Sometimes, people think that if they have paperwork they are protected. Notwithstanding Mistake No. 1 above, just because you have paperwork does not mean that you have avoided the common problems involved with no paperwork. Sometimes, bad paperwork is even worse than no paperwork at all! What do I mean by that? Occasionally, two persons in business will draft a one-page agreement setting forth the terms of their relationship. Neither one of them intend on forming a partnership or even a joint venture, but the wording that they use makes it look like they are partners! When problems arise in the business (for example, unpaid creditors or vendors) when the vendor or the creditor gets a hold of the one-page agreement, they may conclude that a partnership existed wherein each partner is held jointly and severally liable for the debts of the business. This may have been a totally innocent and unintended result. Nonetheless, because the paperwork was not done right, a bitter result occurs.

The type of paperwork that should be done at the outset generally requires the help of an attorney. If you nee an attorney in Ventura or Los Angeles County, you are welcome to consult with our business law lawyer Ventura county / Los Angeles business lawyer. We can assist you to make a paperwork including how to form a legal entity, which type of entity to form, and contracts between the entity and executive employees, key employees, third-party independent contractors who might be providing key services or talent, and key distribution or manufacturing agreements. All of these agreements need to be done correctly for several reasons. One of the best reasons for doing these agreements right is to keep clear, at the outset, what the parties mean in their transaction. A second reason to do it right at the outset is to avoid uncertainty or vagueness. And third, if the paperwork is right it will assist the court in resolving the problem between the business parties.