As an entrepreneur, you’re probably no stranger to the thrill of creating something new and the challenges that come with it. But are you aware of the legal minefields that may lie ahead? Understanding criminal law and its potential pitfalls is crucial for any startup, yet it’s an area often overlooked in the hustle of getting a business off the ground.

Why is it so important? Because falling afoul of criminal law can lead to severe consequences, including hefty fines, damage to your reputation, and even imprisonment. It’s not just about knowing the law—it’s also about understanding how to navigate it to ensure the sustainability of your startup.

Isn’t it worth a bit of your time now to avoid potentially devastating legal issues later? Keep reading to uncover the potential pitfalls in criminal law for startups and learn how you can steer clear of them.

Understanding Criminal Law In The Context Of Business

Criminal law isn’t just about high-profile trials—it also intersects with the business world in many ways. For startups, navigating this landscape can be particularly challenging due to the unique environments they operate in and the high stakes involved.

The types of criminal offenses that could apply to businesses range from fraud and embezzlement to tax evasion and bribery. For a more comprehensive understanding of how criminal law applies to businesses, you can click here.

With a basic understanding of criminal law in a business context, let’s discuss some specific pitfalls that startups often encounter.

Potential Pitfalls In Criminal Law For Startups

Startups, with their unique environments and challenges, can be especially vulnerable to certain legal pitfalls. Here’s where they often run into trouble:

1. Corporate Fraud

This refers to dishonest activities that a company undertakes to give an advantage to itself or an individual. Startups, due to their often rapid growth and sometimes lax oversight, can be particularly vulnerable to instances of fraud, such as false financial reporting or insider trading.

2. Embezzlement

This occurs when someone with access to company funds or assets misappropriates them for personal gain. As startups often have smaller teams and more trust-based environments, they can be especially susceptible to such actions.

3. Tax Evasion

Startups are required to accurately report income and pay due taxes. However, in an attempt to maximize profits or due to simple oversight, some startups may end up underreporting income, overstating deductions, or hiding money offshore, leading to tax evasion charges.

4. Bribery

This involves attempting to influence someone in a public or legal duty by offering, giving, or receiving something of value. Startups looking for quick wins might be tempted to resort to such measures, but the repercussions can be severe.

5. Intellectual Property Violations

Intellectual property often forms the core of a startup, whether it’s software code, a business model, or a product design. Infringing on someone else’s Internet Protocol (IP) rights, even unknowingly, can lead to criminal charges.

6. Employment Law Issues

Employment law covers a range of issues, from wage and hour violations to discrimination and harassment claims. Mishandling these matters can result in criminal liability for startups.

7. Regulatory Compliance

Startups operating in heavily regulated industries, like healthcare or finance, are required to be particularly diligent about compliance. Failing to follow industry regulations can lead to criminal charges.

Now that we’ve identified the common legal pitfalls startups face, let’s explore some proactive steps you can take to avoid falling into these traps.

How To Avoid These Pitfalls

Awareness of potential legal issues is just the first step. It’s equally important to have strategies in place to avoid these pitfalls. Here are some precautionary measures you can take:

1. Hire A Competent Legal Advisor

It’s worth investing in good legal counsel who specializes in business law. They can help you navigate complex legal landscapes, ensure compliance, and advise on potential legal risks. For instance, they can guide you on the legal nuances of protecting your intellectual property or structuring employee contracts to comply with employment law.

2. Create Robust Internal Policies And Procedures

Implementing clear, robust policies and procedures can help ensure everyone in your startup understands the rules and adheres to them. For example, establishing a strict policy against any form of bribery and educating your team about it can prevent legal issues down the line.

3. Perform Regular Compliance Checks And Audits

Regular internal audits can help identify potential legal issues before they become serious problems. In the case of startups in regulated industries, these checks ensure that you’re always in line with the latest regulations.

4. Conduct Staff Training And Education

Regularly training your team about your company’s legal obligations and their role in maintaining compliance can prevent many legal issues. A well-educated team member is less likely to unknowingly infringe on someone else’s IP or commit other offenses that can lead to criminal charges.

Proactively taking these steps can go a long way in safeguarding your startup from potential criminal law pitfalls.

Final Thoughts

Navigating the legal landscape can be daunting, but it’s a critical part of the journey for every startup. The potential pitfalls of criminal law are not insurmountable obstacles, but rather signposts guiding you towards safer paths.

By taking the right steps, you can mitigate risks and focus on what really matters—building and growing your business. Remember, the spirit of entrepreneurship is not just about taking risks—it’s also about managing them.

Understanding the potential legal pitfalls and knowing how to avoid them is a sign of a savvy entrepreneur. After all, a successful startup is not just built on great ideas, but also on a solid legal foundation. So, here’s to building a startup that’s not just innovative, but also legally sound!

This content should not be construed as legal advice. Always consult an attorney or legal professional regarding your specific legal situation.

In a recent post, I shared all I’ve learned about purchasing multiple domain name variations. Copyright and trademarks have been on my mind a lot lately. This got me thinking about whether a brand or business should trademark a domain name.

Now, because I’m not a lawyer and don’t pretend to be one, I went in search of people much smarter than me who could answer my simple question. Should you trademark your domain name?

Below, I’m sharing what they told me to help you decide when to consider seeing a trademark attorney for yourself.

Marc P. Misthal, Principal, GRR

Marc P. Misthal is a trademark attorney with Gottlieb, Rackman & Reisman, P.C. in Manhattan, New York. He told me that in short, yes, business owners should trademark their website domain names. The longer answer is a little more complicated. Here’s what he had to say:

“In the U.S., trademark rights are acquired by using a mark, not by registering it. So applying a mark on a hangtag, label, packaging, sign, etc. would create rights in the mark—registration is not necessary.

“The question here seems to be whether a business owner should register their domain name as a trademark. If they are using it as a trademark then yes, they should. What does that mean? Simply using a domain name as part of a URL is not going to be enough to secure a trademark registration. The Trademark Office requires proof that a mark is in use before it will issue a registration, and it will not accept a screenshot showing a URL with the domain as proof of use. If the domain name is being used as the brand, then there will likely be additional use, such as prominent use on a website selling products or services, that the Trademark Office will accept. 

“Having a trademark registration is very valuable. A registration makes notice letters more impactful, and is helpful in taking action against infringing uses that appear on online platforms; many platforms will not take action to stop an infringement without proof of a trademark registration.”

David Reischer, Esq., LegalAdvice.com

David Reischer is an attorney and CEO of LegalAdvice.com. He says that trademarks are imperative for businesses that want to protect their brand names. But you need to go beyond trying to trademark just the domain name. Here’s what he had to say:

“Domain trademarking a mark that consists of a domain name may be possible. It would be registered as a trademark or service mark in the U.S. Patent and Trademark Office (U.S.P.T.O). However, just like any other mark that comes before the U.S.P.T.O, the domain name may only be approved on the Principle Register if it functions to identify the particular source of goods or services offered. That is to say, the mark must be distinctive so as to be capable of distinguishing the applicant’s goods or services from others.

“The main benefit of acquiring trademark protection is for the legal benefit of stopping other third parties from infringing on the brand’s trademark. A business needs to trademark all corporate and product brands that are inherently distinctive to the identity of the business. Typically a business will trademark a corporate logo, product line identifiers, slogans, and any other attributes that are source identifiers of the business—including a domain name.”

Laura Winston, Principal, Offit Kurman

Laura Winston is a trademark attorney with more than 25 years of experience and a principal in the AmLaw 200 law firm Offit Kurman. Here’s what she had to say:

“Securing trademark rights and registering a trademark used on one’s website has always been important and highly recommended. As we move into the realm of the metaverse, NFTs, and other new digital assets, it will be even more important to secure brands that are used digitally. There are tips and tricks for claiming trademark rights and obtaining a trademark registration for a domain name. Most significantly, it needs to be used as a trademark on the website, not just as the URL that directs to the website.”

James Yang, OC Patent Lawyer

James Yang is a patent attorney and a partner with the firm of Klein, O’Neill & Singh LLP in Orange County, California. Here’s what he had to say:

“The name of the domain should be trademarked because that is typically their main brand. You don’t want others to take away your ability to use your own trademark. Also, before investing a lot of time and money into your main brand, you would want to get a trademark search done. The trademark search [sometimes] mitigates the need to rebrand after a product launch.”

Jeremy Peter Green Eche, JPG Legal

Jeremy Peter Green Eche is a trademark broker and attorney with JPG Legal. He says you only want to trademark your domain name if it matches your brand name. Here’s what he had to say:

“I’m a trademark attorney running a four-lawyer trademark-focused law firm based in Brooklyn, New York. I also run a trademark marketplace called Communer where people can buy and sell trademarks, often with domain names attached.

Business owners should always strive to own a federal trademark registration for their brand name. But they should only register their full domain name as a trademark if that’s the name they use in their branding.

For example, if somebody uses the domain name Google.com, they should only register Google.com as a trademark if they present themselves in their branding as Google.com. If it just says Google at the top of the website, then they should register Google as a trademark.

If their domain name is generic, e.g. Petfood.com, then they are not going to be able to register their name as a trademark without including the top-level domain. Generic terms ordinarily cannot be registered as trademarks. So in this example, the company absolutely should try to register Petfood.com as a trademark, and not just Pet Food or Petfood. Before a U.S. Supreme Court decision in 2020 called *Bookings.com*, you could not even register a generic name with a .com top-level domain added, but now it’s actually allowed.”

Key takeaways

Many of the other attorneys I spoke with had the same general words of wisdom. Pretty much all agreed that trademarks are a good idea for brand preservation and protection. How you go about your trademark is where things get tricky.

Domain name trademarking requirements and who it will work for:

Based on my research and feedback from attorneys, to trademark a domain name, it needs to be your brand identifier. Otherwise, you will be better off trademarking your brand name, logo, and other elements of your brand identity.

Why does someone need to trademark a domain name?

If it is your brand identifier, trademarking it will protect your brand and prevent others from using your brand name. This can help potential customers avoid being confused about who they are working with/buying from.

What can happen if you don’t trademark?

The Reader’s Digest version is that if you don’t trademark, you might not be legally protected from someone else attempting to use your brand/company name. That’s not to say they would be able to use your name, but a lawsuit could prove quite costly.

Next steps to trademark your domain name

So, where do you go from here? Seek out legal counsel. Always consult an attorney to better understand your specific situation. Attorneys offer free consultations to at least help point you in the right direction. It’s no secret that working with a lawyer isn’t cheap. But the amount of money and headache it can save you, in the long run, might be worth it. After chatting with all these lawyers I know I’m in the market for a trademark attorney for a business idea I’ve been considering. Based on everything they shared with me, I think trademarks are a necessary business expense. If nothing else, it gives you peace of mind that your brand/company identity is better protected.

This content should not be construed as legal advice. Always consult an attorney or legal professional regarding your specific legal situation.

This content should not be construed as legal or tax advice. Always consult an attorney or tax professional regarding your specific legal or tax situation.

Nobody genuinely enjoys doing taxes, whether it’s as an individual or on behalf of a business. But small business owners, especially, dread tax season. There are some good reasons for this — for starters, it’s not a fun process — but for the most part, small business owners make business taxes much more complicated than they have to be.

Are you making some of these common mistakes with business taxes?

The basics of business taxes

This guide isn’t meant to educate you on business taxes from start to finish, but for the purposes of our discussion, it’s important to give you some tax tips.

Businesses are responsible for paying and withholding taxes. Sometimes, you’ll be responsible for paying taxes on the money you make. You’ll also be responsible for withholding and paying taxes on behalf of your employees.

There are five general types of business taxes you should be aware of:

Income tax

Nearly all businesses must file an annual income tax return (partnerships must file an information return). There are different standards and procedures for this, depending on how your business is structured.

Estimated taxes

Your business may be responsible for paying taxes throughout the year in the form of “estimated tax” payments. Each quarter, you’ll make a contribution to the year-end taxes you project you’ll owe, including the income tax and the self-employment tax (if applicable).

Self-employment taxes

Self-employment taxes apply to self-employed people (i.e., entrepreneurs) to cover Medicare and Social Security. There are some special rules and exceptions here, but most self-employed people will owe this tax.

Employment taxes

Employers have specific employment-related tax obligations. For example, you’ll be responsible for withholding income taxes and withholding and contributing payments for Social Security and Medicare taxes.

Excise taxes

Some businesses will have to pay special taxes on products they sell or manufacture — alcohol and gasoline are two examples.

At the end of the year, you’ll file a tax return for your business and provide documentation to the government to make sure you’ve paid taxes properly and provide any additional payments that are owed.

Note that in addition to filing taxes on a federal level, you’ll also have to pay taxes on state and local levels — and if you do business in multiple areas, you may have to file multiple tax returns.

Related: When are business taxes due and how can you prepare now?

The 3 most difficult elements of tax season

What makes tax season difficult for business owners? These are the top three challenges they face:

1. Record keeping and reporting

Most business owners start to face challenges because of poor recordkeeping and reporting. The meatiest part of “doing your taxes” is simply filling out forms. You’ll note the expenses you’ve paid, the money you’ve made, and dozens of other details and calculations. But if you’ve kept sloppy records throughout the year or if you don’t know the answers to these questions, you’re going to have a hard time filling out the forms accurately.

2. Meeting deadlines

Tax deadlines can feel tight, especially if you’re also juggling all your business operations while navigating the world of business taxes. If you’re caught off guard, or if you have trouble getting the paperwork together, you might have to scramble to meet a deadline — or face the consequences of missing one.

3. Using the correct forms

The IRS has hundreds of forms, they’re not labeled intuitively, and the instructions are often written in a clunky and disorganized fashion. It’s a pain to figure out which forms you need and how to use them.

9 mistakes small business owners make when filing business taxes

Many small business owners make some combination of the following mistakes when filing business taxes:

1. Missing deadlines

The most common mistake is the simplest to understand and the easiest to avoid: missing deadlines. Some combination of procrastination, inattention, disorganization and/or apathy ultimately leads to business owners missing important deadlines.

2. Keeping inaccurate or inconsistent payroll records

If you keep sloppy records, or if you don’t know where to find certain information, you’re going to have a hard time filling out and submitting the requisite forms.

3. Selecting the wrong business entity

Is your business a sole proprietorship? Or is it an LLC? You should know the answer to this question and know the differences between these business entities.

Every year, there are at least some business owners who file a return based on the wrong structure.

Taxes do tend to be more complicated for corporations and LLCs than they are for sole proprietorships and partnerships, but don’t let that intimidate you.

4. Confusing business and personal expenses

You have a client who’s also a good friend. You take him out to dinner for chit chat and laughs, and you happen to talk about business for a few minutes during this interaction. Does that technically count as a business expense since he’s a client of yours?

This is ambiguous territory. But the majority of your expenses will be very clearly business related or not business related. Delineate these categories and you’ll have a much easier time accurately reporting your expenses.

5. Deducting startup expenses incorrectly

Your business’s startup costs are (mostly) deductible, but the rules are somewhat difficult to understand.

According to Intuit QuickBooks, “The IRS allows you to deduct $5,000 in business startup costs and $5,000 in organizational costs, but only if your total startup costs are $50,000 or less. If your startup costs in either area exceed $50,000, the amount of your allowable deduction will be reduced by the overage. And if your startup costs are more than $55,000, the deduction is eliminated.”

Additionally, you can deduct startup expenses over several years. It’s easy to get things wrong here.

6. Categorizing staff members incorrectly

Modern businesses often work with a mix of full-time employees, part-time employees and independent contractors, all of whom have different tax implications. Categorizing your staff members incorrectly or accounting for them inappropriately could result in complexity (and possibly penalties) later on.

7. Glossing over small expenses

There are tons of little expenses accrued by your business, from petty cash expenditures to magazine subscriptions. If you don’t account for these when tallying up your expenses and deductions, you could end up paying more in business taxes than required.

8. Ignoring deduction limits

Not all deductions are treated equally. For example, talk to your tax professional about .

If you try to deduct too much, you’ll run into major issues.

9. Neglecting some tax expenses

Businesses have many different types of taxes to consider, such as property taxes, payroll taxes, local taxes, excise taxes and self-employment taxes.

Yes, it’s a lot to keep track of, but each tax is important.

5 ways you’re overcomplicating things

As we’ve seen, there are some elements of business taxes that are truly complex. But many business owners end up exaggerating these complexities and overestimating how difficult doing business taxes truly is.

Why are you making business taxes overly complicated?

Chances are, you’re getting tripped up by one or more of the following tendencies:

1. You assume this is unfamiliar territory

Are you one of those people who “just isn’t good with numbers”? Do you believe yourself to be bad with money? If so, you may instantly underestimate your ability to handle taxes.

You don’t have to be a math genius or a personal finance guru to handle business taxes, so don’t sell yourself short.

2. You’re learning from the wrong sources

The IRS isn’t known for its approachability or clarity. In fact, many online sources are notoriously bad at communicating how taxes work. If you read an article that doesn’t make sense, don’t blame yourself and don’t blame the complexity of taxes. Just move on to an article that phrases things in different, easier-to-understand terms (or hire an expert).

3. You’re lost in the “big picture”

Businesses have many tax obligations and a cluster of responsibilities come tax season. If you try to contemplate and plan for all of them at once, you’re going to feel overwhelmed. Instead, try to focus on one step at a time and one form at a time. No individual step in the business tax world is unconquerable.

4. You’ve heard horror stories

We’ve all heard about businesses that have made mistakes and faced massive penalties but these are often exaggerated.

If you plan ahead, you shouldn’t miss any deadlines, and if you miss a filing or payment deadline, the penalties are pretty reasonable.

As long as you’re not committing tax fraud, there’s no reason to add extra anxiety to an already-stressful responsibility.

5. You have too many other responsibilities

Many business owners who worry excessively about business taxes are simply distracted by other responsibilities. Running a business and taking care of a family is a lot of work, so, of course, the temporary addition of business tax planning seems like an obtrusive and unnecessarily complicated burden.

4 ways small business owners can make tax season easier

How do you make business taxes easier?

There are some important strategies you can use to make tax season much less complicated for your business:

1. Start early

The best thing you can do is start early. The deadline problem disappears if you start working on your taxes a few weeks, or ideally, a few months ahead of when you would normally start.

You’ll have much more time to gather records, check your numbers, find the right forms and assemble everything for delivery.

You’ll also be less stressed — and you won’t be as weighed down by other priorities and responsibilities.

2. Hire the right people

The right team can make a huge difference in how you prepare your taxes.

Hiring a professional accountant, or for larger businesses, an entire team of bookkeepers and accountants, can spare you the headache of trying to solve all your financial challenges on your own.

If you’re committed to doing the work yourself or if you can’t afford an accountant, make sure the people you work with — including contractors, vendors and clients — are open and transparent with their recordkeeping.

3. Keep consistent, accurate records

Accurate and consistent recordkeeping will make business taxes a breeze. The trouble is, you have to stay organized throughout the year.

Certain types of software, like Microsoft 365, can make it much easier to store your records in one place (and keep them properly organized so you can always find what you’re looking for). Just make sure you track all your financial information consistently, and back up your records in the cloud for security reasons.

4. Stick to a schedule

When tax season starts getting nearer, set a schedule for yourself. For example, if you know the deadline to send out W-2s is January 31, make it a point to send them by the 24th at the latest. Use mini-deadlines leading up to the 24th to keep yourself on track for that long-term goal. This will also force you to break each responsibility down into smaller, more easily digestible steps.

Business taxes don’t have to be taxing

There are some challenging elements of business taxes, but in reality, business taxes are simpler and more accessible than we make them out to be.

If you take your time, start early, hire the right people and prioritize keeping accurate, organized records, you’ll find yourself completing your tax obligations in record time — with minimal stress.