15+ years of watching Toronto businesses make the same mistakes. Here are the patterns — and the small, cheap choices that prevent them.
The single most common pattern Jonathan sees: a sole proprietorship that grew into something real without ever being incorporated. Two years and two employees in, the founder is one customer dispute away from a personal lawsuit. Restructuring later works, but it costs more and creates avoidable tax events. Decide the structure when revenue is small. Pivot when it's large.
Especially with friends and family. The phrase "I trust them, we don't need a contract" precedes more partnership disputes than any other. A written agreement isn't a sign of distrust — it's a record of what everyone meant on the day they shook hands. Memory drifts. Documents don't.
Commercial leases are five-to-ten-year obligations drafted by the landlord's lawyer. They contain personal guarantees, rent escalation clauses, demolition clauses, exclusive use carve-outs, and assignment restrictions. Most can be negotiated — but only before you sign. Always have your lawyer review a commercial lease. The fee is small relative to what you're committing to.
Indemnity clauses transfer risk. They show up in supplier agreements, customer agreements, partnership agreements, and almost every commercial document. A poorly drafted indemnity can put you on the hook for damages that have nothing to do with your conduct. Read them. If you don't understand them, have a lawyer read them.
When a dispute happens — and disputes happen — the side with the better paper trail wins. Email confirmations of phone calls. Written change orders. Receipts. Signed acceptance of work. The five extra minutes documenting today is the difference between recovering $20,000 and losing it.
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Commercial general liability, professional liability (if you sell advice), property, business interruption, cyber. Insurance is another form of contract law — and the policy is the contract. Read it. Understand the exclusions. Update the coverage as the business grows.
Every week an unpaid invoice sits is a week your collection chances drop. After 90 days the chance of full recovery falls off a cliff. Have a process: friendly reminder at 30 days, firm reminder at 45, demand letter at 60. Hand it to a lawyer before 90.
The biggest mistake isn't not knowing tax law or contract law or employment law — it's not knowing that you don't know. Hire the experts. Pay the small fee. Move on. The hours you save and the mistakes you avoid pay for the advice many times over.
Most business problems are legal problems waiting to happen. The cheap version is solving them before they become problems.
Not for everything — but for the moments when something arrives and you need a 15-minute read on it. A relationship-based business lawyer is one of the best investments a Toronto founder can make. The 30-minute consultation is free; the long-term relationship pays for itself.
Book a free consultation any time. No pressure to engage; just an experienced read on whatever's on your desk.
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