On the Texas Small Business Law Blog there is an helpful post on the common mistakes made by small business owners. The common mistakes listed by business attorney David Willis include:
2) Failure to plan and adjust for growth.
3) Over-emphasis on the type of business organization.
4) Failure to understand the impact of an employee.
5) Failure to understand the impact of employees.
6) Not having an employee manual.
7) Thinking: “I’ve got some experience, I can do this myself.”
8) Not keeping up with the paperwork.
9) Failure to plan for litigation.
10) Not having an electronic document retention policy in place.
11) Failure to consult an attorney.
David is following up with more detailed posts about each mistake. The one that caught my eye was No. 3 – over-emphasis on the type of business organization. David warns that small business owners should not consider themselves invincible just because they have formed a business entity. The small business owner must operate the business as a distinct entity.
In the past I have written about some of the exceptions to limited liability. The best way to maintain limited liability with your corporation or LLC is to is to make sure you keep your personal guarantees to a minimum, pay applicable taxes and keep all business dealings separate from your personal accounts. Managing your small business corporate goverance (i.e. regular meetings of shareholders and directors with minutes documenting the meetings) is also critical.