1. Choosing the wrong entity.

Different types of business need different company structures. One serious business mistake is choosing an entity that does not suit your business or does not suit the plans you have for your company's future. Some entity forms are not available for certain industries, while other forms are not necessary unless your company intends to grow in certain ways. But mostly, there are tax consequences to the entity that is chosen, so consulting with an attorney can help you choose wisely and save you money in the long run.


2. Choosing the wrong state of incorporation.

I know, you heard that California taxes are really high, or that another state has lower fees - so you want to incorporate elsewhere and pay less. But if are operating in California you are more than likely going to be subject to California's tax scheme anyway. So incorporating in another state could be a costly mistake that results in your business having to duplicate many administrative and legal efforts including: filing the appropriate documentation with both California and the state of incorporation as well as paying both California taxes and fees and the fees for having your business incorporated in that other state. To be sure, there are times when incorporating in another state should be considered. But if you are transacting business in California on a regular basis than incorporating in another state won't help you avoid California's fees and taxes - instead, you may find yourself with a double whammy of dealing with two states!


3. Using a legal document service to incorporate.

I know, I'm beating a dead horse here, but these services aren't providing legal advice and you could end up having to pay a lawyer later to fix them. Fixing these things after the fact is inevitably going to cost you more money than doing it right in the first place. Avoid this costly business mistake and consult and attorney to form your business.