Top 20 Legal Mistakes Entrepreneurs Make: Expertise from Antwort Law Consultants. Part 1

Over eight years of consulting with entrepreneurs worldwide, Antwort Law has gained extensive experience in the legal and tax aspects of various businesses. While each business is unique, there are certain mistakes that many make, regardless of jurisdiction, industry, or current circumstances. In this article, we'll share the ten most common mistakes Antwort Law finds during legal audits in international and local structures.

1) Relying entirely on neural networks when drafting contracts

ChatGPT and other similar programs have become an integral part of our everyday and professional lives. While they significantly facilitate the understanding and drafting of complex legal documents, they often make absurd and even obvious errors: they confuse jurisdictions, rely on outdated laws, and confuse facts, fiction, and your expectations. If you value your professional reputation and want to avoid future problems due to inaccurate contracts, we recommend having important documents reviewed by a lawyer.

2) The contract lacks key terms: liability, acceptance, deadlines, penalties, and termination.

You won't believe how often we see contracts that appear to be mere formalities and don't even provide any mechanisms for resolving key issues. KPIs, deadlines, acceptance mechanisms, penalties, and many other important aspects are not "hardwired" into the contract. If deadlines are missed, conflicts arise over quality, payment, or other serious disputes, these contractual "mines" come into play: under such contracts, it is impossible or difficult to prove late delivery or poor performance, to recover damages, and so on.

3) The contract doesn't correspond to the actual relationship (reclassification)

To avoid describing complex services, many entrepreneurs simply list "consulting" in their contracts, but in reality, this could include agency/resale/HR management/client acquisition/payment processing, and other services that can only be loosely classified as "consulting." Such inconsistencies can raise suspicions among banks, leading to blocked payments or tax reclassification with accompanying fines and additional assessments, or even the risk of the scheme being deemed artificial. The agreement must reflect the actual economic function: who does what, what they are compensated for, and what risks they bear. In this case, we conduct an analysis and harmonize the contractual framework, payments, and documents.

4) Partnership "based on trust" without a partnership agreement

Many joint projects and endeavors are built on mutual trust, often with either a formal agreement without clearly defined "rules of the game" or even without a partnership agreement at all. The very first serious discussion turns into a dead end, where, for example, a minority shareholder blocks decisions and a situation of corporate blackmail arises. A true partnership agreement, which will save you from future headaches, should include voting rights, dividends, non-compete rules, partner exit and share transfer mechanisms, and protection for minority and majority shareholders.
Antwort Law's lawyers always draft a corporate constitution that reflects your balance of power and goals.

5) Partner roles and powers (operating systems, financial controls, access) are not defined.

If all partners have identical roles, functions, and access to company resources, negative events such as arbitrary action or toxic decisions that cannot be reversed can occur. In complex situations, such as partner departure, disputes, audits, or blocked bank accounts, these can even be fatal for the company. We help you properly draft all necessary policies, procedures, corporate documents, and assign access and authority for your security.

6) No partner exit mechanism (buy-out, valuation, deadlines)

Over time, a partner may tire, move, or feel undervalued, and decide to "leave the game," with their stake becoming an "anchor" that holds the company "in limbo." Without a clearly defined exit mechanism for a partner/partners, conflicts arise, resulting in a decline in profits. Antwort Law consultants set up a managed exit process to ensure your business continues to thrive.

7) Lack of a holding company and ownership logic

When expanding a business, many entrepreneurs, due to a lack of attention and resources, leave the overall structure of their companies and assets operating "as is." In reality, multiple projects/countries/teams/companies lead to a merging of risks, an illogical flow of financial resources, and the inability to scale or sell business units separately. In such situations, a corporate structure is vital for the owner: for example, a holding company plus subsidiaries by function/country/product; clear intra-group agreements. We design the structure to suit your goals, whether growth, protection, tax efficiency, or sales.

8) Mixing jurisdictions and flows (the same contracts/payments to different countries)

In this scenario, Contracts and invoices often mismatch the country of service provision or delivery, with employees or contractors in one country, income in another, and expenses in a third, leading to the risk of double taxation, currency violations, and compliance issues. This chaotic situation can be uncovered during
tax inquiries, bank audits, CRS/information exchange, and other procedures.
We help distribute functions across companies and countries, align contracts, payment purposes, and documents.

9) No protection from lawsuits and bankruptcy

When your assets can easily be seized, your accounts frozen, and there are no alternative ownership and control mechanisms, any serious dispute or conflict with a major counterparty, government claims, or creditors can lead to a business shutdown. We help build multi-layered support: legal barriers and management procedures.

Antwort Law encounters these and other mistakes entrepreneurs make every day and helps correct them, building a more reliable, profitable, and problem-free tax and legal structure. We will help you:

• Create a roadmap for your group of companies and assets (as is/as should be);
• Create a prioritized list of critical risks (A/B/C);
• Structure a new or adjusted ownership and asset protection structure;
• Defining the contractual framework (templates + key terms + appendices) and IP framework (owner, transfer of rights, licenses, registries);
• Establishing document management (registries, regulations, control);
• Create a step-by-step implementation plan + support.

Contact us today, and the future of your business will be securely protected.

Lidia Ivanova

International lawyer
Antwort Law