Starting a business is exciting. You move fast, test ideas, find customers, and try to survive. Legal matters often feel like something to “deal with later.”

Unfortunately, for many startups in Cambodia, “later” becomes too late.

Most legal problems faced by startups are not complicated — they are preventable mistakes made in the early stages. Below are the most common legal mistakes we see, and what founders can do to avoid them.

1. Not Registering the Business (or Registering Too Late)

Many startups operate informally at the beginning, especially online businesses or small teams.

Why it might be a mistake:

• You expose yourself to personal liability
• You may face tax or compliance issues later
• Banks, partners, and investors may refuse to work with you.

What to do instead:
Get proper advice early on about whether and when to register, and which structure suits your business (sole proprietorship vs company).

2. Using Free Contract Templates from the Internet

Free templates look convenient — until something goes wrong.

Common problems with templates:

• Written for another country’s law
• Missing payment, termination, or liability clauses
• Not tailored to your actual business model.

Real risk:
When a dispute arises, the contract may be unenforceable or disadvantageous to you.

What to do instead:
Even a simple contract should be reviewed or adapted to Cambodian law and your real situation.

3. No Clear Agreement Between Founders or Partners

Many startups are formed by friends or family. Trust is high — paperwork feels unnecessary.

Why this is dangerous:

• No clarity on ownership or decision-making
• No plan if someone leaves
• Disputes can destroy both the business and relationships.

What to do instead:
Have a simple written agreement covering roles, ownership, profit sharing, and exit scenarios.

4. Hiring People Without Proper Employment Documents

Startups often hire casually:

• verbal agreements
• unclear job roles
• no written contracts.

Risks include:

• Labour disputes
• Unexpected termination costs
• Non-compliance with labour laws or NSSF requirements.

What to do instead:
Use proper employment contracts and understand your basic obligations as an employer from day one.

5. Mixing Personal and Business Money

Using personal accounts for business transactions feels easy at first.

Why it becomes a problem:

• No financial clarity
• Difficult tax reporting
• Personal assets exposed to business risks.

What to do instead:
Separate personal and business finances early. It saves time, money, and stress later.

6. Ignoring Translation and Documentation Accuracy

For startups dealing with foreign partners, authorities, or investors, documents often need translation.

Common mistake:
Using cheap or inaccurate translations for:

• contracts
• corporate documents
• official filings.

Why this matters:
Poor translation can change legal meaning, create disputes, or cause rejection by authorities.

What to do instead:
Use professional or certified translation, especially for legal or official documents.

7. Waiting Until There Is a Problem to Seek Legal Help

Many founders only seek legal advice after something goes wrong.

By then:

• Options are limited
• Costs are higher
• Relationships may already be damaged.

What to do instead:

Think of legal support as risk prevention, not damage control.

Final Thought: Legal Mistakes Are Expensive — Prevention Is Not

Most startup legal mistakes are not about bad intentions — they are about lack of awareness.

The good news?
With the right guidance early on, startups can:

• avoid disputes
• protect their growth
• build credibility with partners and clients.

Need help reviewing your contracts or setting up your business properly?

Contact us. A short conversation now can save you months of problems later.