New year, new you. How about new (and better) business habits?
Every January, business owners set goals. More revenue. Better systems. A bigger team. But here’s one resolution that rarely makes the vision board: cleaning up the loose ends that have been quietly collecting dust in the corner of your business.
We get it. This stuff isn’t glamorous. It doesn’t have the same sparkle as a rebrand or the thrill of a product launch. But those unglamorous details? They’re the foundation everything else sits on. And if that foundation has cracks, eventually something’s going to shift.
So before you charge into 2026 with ambitious plans, let’s make sure you’re not dragging these five common mistakes along with you.
Mistake #1: The Handshake Deal
Why Verbal Agreements Fail
“We’ve worked together for years. We don’t need a contract.”
Famous last words.
Look, we love trust. Trust is beautiful. Trust makes the business world go round. It’s capital. It’s currency. It is earned and can be appreciated over time, and is one of the most valuable resources any business has. Once trust is established, we can be tempted to rely on trust alone. But trust and documentation are not mutually exclusive. In fact, good documentation protects trusting relationships by making sure everyone remembers what they agreed to six months from now when memories get fuzzy.
Why it’s a mistake: Verbal agreements are technically enforceable, but proving what was actually agreed upon is a nightmare. [Link to video] When there’s no written record, disputes become a “he said, she said” situation. And those situations tend to end friendships, business relationships, and bank accounts, often all three.
The fix: Get it in writing. Every time. This doesn’t mean you need a forty-page contract for every engagement. Even a clear email summarizing the key terms after a phone call (scope, payment, timeline, deliverables) and asking the other side to confirm is better than nothing. For ongoing or significant relationships, invest in a proper contract. Your future self will thank you.
Mistake #2: The “I’ll Deal With It Later” Entity
Why Ignoring Corporate Formalities Puts You at Risk
You filed your LLC paperwork three years ago. Victory! But since then? The operating agreement is sitting in a drawer (or worse, doesn’t exist). You haven’t held any meetings or documented any major decisions. You, your business, and your partners have all evolved from what and who you were on day 1 of the company, but your structures haven’t evolved to keep up. Your business bank account and personal account have become… close friends.
Why it’s a mistake: That legal entity you created is supposed to be a shield, protecting your personal assets from business liabilities. But that shield only works if you treat the business as a separate entity. When you blur the lines (mixing funds, skipping formalities, ignoring your operating agreement), you’re handing opposing counsel a roadmap to “pierce the corporate veil” and come after your personal assets.
Beyond that, your structures need to reflect your actual practices. What you do, how you make decisions, and who has what responsibilities. When your structure doesn’t reflect actual practice, either because it’s based on “best practices” you never actually followed or hasn’t been updated to reflect the natural evolution of the business, you risk having your business fly blind, expensive, and trust-destroying disputes, or costly inefficiencies.
Also, if you elected S corporation taxation, the IRS expects you to observe corporate formalities. Yes, even if you’re the only owner. (We know, it feels a little like having a meeting with yourself. But think of it as valuable reflection time.)
The fix: Dust off that operating agreement, or create one if it doesn’t exist. Open a dedicated business bank account if you haven’t already, and actually use it. Document major decisions, even informally. The minutes don’t need to be fancy; they just need to exist. [Link to Blog] And if you’re not sure whether your current structure still makes sense for where your business is headed, that’s worth a conversation.
Mistake #3: The Unprotected Idea
How Neglecting Intellectual Property Can Cost You
You’ve built something special. A brand name customers love. A logo that stands out. A process that gives you an edge. But have you actually protected any of it?
Why it’s a mistake: Ideas, names, and creative work don’t protect themselves. Without trademark registration, someone else could start using a confusingly similar name, and there’s not much you can do about it, especially if they registered first. Without proper agreements, that logo your freelance designer created? They might still own it. That proprietary process your former employee helped develop? They might walk out the door with it.
The fix: Conduct a trademark search and consider federal registration for your key brand assets. Make sure your contractor and employee agreements include clear intellectual property assignment language. You want to own what you’re paying people to create. And if you have genuine trade secrets, implement confidentiality agreements and reasonable security measures to keep them that way.
Mistake #4: The Misclassified Worker
The Employee vs. Independent Contractor Trap
Ah, the independent contractor. Flexible, cost-effective, no payroll taxes to worry about. Except… is that person actually an independent contractor? Or have you just been calling them that because it’s convenient?
Why it’s a mistake: Worker classification isn’t a choose-your-own-adventure situation. Federal and state agencies have specific tests to determine whether someone is an employee or an independent contractor, and those tests look at the reality of the relationship, not what you wrote on a piece of paper. Misclassification can trigger back taxes, penalties, and interest from the IRS. It can mean liability under employment laws you thought didn’t apply to you. And depending on your state, it can get expensive fast.
The fix: Honestly evaluate your working relationships. Does this person set their own hours and methods, or do you direct their work? Do they work for multiple clients, or primarily for you? Do they have their own business, or are they essentially part of your team? If the answers point toward “employee,” it’s time to restructure the relationship or reclassify. The cost of doing it right is almost always less than the cost of getting caught doing it wrong.
Little bonus nugget, I made a YouTube video that breaks down how to safely classify a contractor. Give it a watch! [link to YouTube]
Mistake #5: The DIY Legal Document
Why Templates and Copied Contracts Can Backfire
The internet is a wonderful thing. Need a contract template? There are thousands. Need an employee handbook? Just download one. Need terms of service for your website? Copy them from a competitor.
What could possibly go wrong?
Why it’s a mistake: Generic templates don’t know your business. They don’t know your state’s laws. They don’t know the specific risks in your industry or the particular dynamics of your relationships. That free NDA you downloaded might be missing crucial provisions—or include provisions that aren’t enforceable where you operate. That employee handbook template might promise things you can’t deliver or fail to include policies your state requires.
DIY documents also have a way of becoming fossils. You downloaded them once, and there they sit, unchanged, even as your business evolves and laws shift around them. That’s because they were never based on you, so you (very understandably) weren’t invested in them.
The fix: Templates can be a starting point, but they shouldn’t be the ending point. Have key documents reviewed by someone who understands both the legal landscape and your specific business [link to Our Team Page]. And build in a regular review cycle, at least annually, to make sure your documents still reflect reality. Think of it like an oil change for your business: not exciting, but essential.
A Clean Slate for 2026
Here’s the good news: none of these mistakes is unfixable. They’re not business-ending catastrophes waiting to happen. They’re loose ends. And loose ends can be tied up.
The even better news? You don’t have to figure it out alone. Grab a coffee (or something stronger), pull up your business documents, and let’s take a look together. Team Way Law is here to help you head into 2026 with a solid foundation, clear agreements, and the confidence that comes from knowing your house is in order.
Let’s leave these mistakes where they belong. In 2025.
Ready to get your business buttoned up for 2026? Contact Way Law today.