6 Things That Could Get Your New Business into Trouble Fast

Starting a new business is a lot like learning to drive. There’s excitement, the thrill of hitting the open road, and the terrifying realization that you really don't want to crash. Just as you wouldn’t take a car out without learning the rules of the road, you shouldn’t embark on your entrepreneurial journey without a heads-up on potential pitfalls. Here are a few business faux pas that could send your shiny new venture into a tailspin faster than you can say "Chapter 11."

1. Flying Under the Radar with the IRS

First things first, if you think dodging the IRS is a good idea, spoiler alert: it’s not. One major misstep new business owners make is not using IRS FEIN filing service to obtain an EIN. Consider the EIN your business's Social Security number. Without it, you can’t pay taxes, and let me tell you, not paying taxes is about as advisable as texting during a driving test. Get your EIN to ensure you're on the right side of the law and not on the IRS’s holiday card list.

2. Mixing the Pot – Blurring Personal and Business Finances

Here’s a tip that should be a no-brainer but often isn't: Keep your personal and business finances separate. Using your personal bank account for business transactions is like using your toothbrush to clean the grout in your bathroom—messy and ill-advised. It complicates your taxes and can make you personally liable for business debts. Open a business account and save yourself the headache.

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3. Ignoring Local Regulations and Zoning Laws

Just because your home can fit a server farm doesn’t mean it should host one. Ignoring local zoning laws can lead to fines, penalties, and having to shut down operations. Before you set up shop, make sure you’re zoned for whatever it is you’re doing, especially if you’re running your business from home. You don’t want to be the star of your own reality show, "Neighborhood Zoning Wars."

4. Intellectual Property Missteps

Using a catchy tune in your online ad might seem like a great idea until the record company sends you a cease and desist. Intellectual property laws can be a minefield if you’re not careful. Whether it’s copyright, trademarks, or patents, make sure you have the right to use the materials and names involved in your business. Remember, just because it’s on the internet doesn’t mean it’s free to use.

5. Skimping on Contracts

If your business deals don’t go beyond verbal agreements or handshakes, you’re setting yourself up for drama. Contracts might seem like a drag, but they clarify expectations and protect both parties. They’re like relationship prenups—no one expects things to go south, but if they do, you’ll be glad you have them.

6. Poor Debt Management

Just like personal credit card debt can torpedo your financial health, poorly managed business debt can sink your company. Understand the terms of any credit you take on and have a solid plan for repayment. Don’t let debt become the anchor that drowns your business.

Starting a new business is an adventure. By steering clear of these pitfalls, you’ll not only keep your business legal but also position it for long-term success. So buckle up, check your mirrors, and enjoy the entrepreneurial ride—just mind the speed bumps!