Establishing and running a small business is an exciting adventure, but it can also be very challenging due to the many aspects that require attention. In trying to juggle it all, it is quite easy to let some things slip through the cracks, such as neglecting some legalities regarding the business.
In this blog post, we discuss the top legal mistakes small businesses often make and how to avoid them. By avoiding these common legal mistakes, small businesses can protect themselves, mitigate risks, and ensure long-term success.
Failing to properly structure and register your business
This is a very common mistake among small businesses. They do not understand that without appropriate structure and business registration, you are merely pursuing a hobby instead of running a business.
How to avoid this
Decide from the onset what type of structure you want to have in your business, either sole proprietorship, limited partnership, corporation, or limited liability company, among others. Once you have chosen a structure to run with, get your business registered. This is the first step towards positioning your business for growth, as being duly registered is one of the first requirements for accessing funding.
Operating without written agreements
The gentlemen of yore may have been able to get away with concluding business deals with a simple handshake but as a 21st century business owner, you do not want to operate that way. Operating without clearly written agreements can lead to misunderstandings, disputes, and potential legal consequences.
How to avoid this
Understand that a well-drafted and comprehensive written agreement is crucial for establishing clear expectations, protecting intellectual property, defining relationships with your customers, suppliers, and partners, reducing risks and resolving disputes. Document every transaction you conduct and ensure that every agreement is signed by all the parties concerned.
Non-compliance with employment laws
Non-compliance with employment laws and lacking proper employee documentation are common legal pitfalls for small business owners. An example would be incorrectly classifying an employee as an independent contractor. The rules that differentiate an employee from a contractor are complex. Misclassification could lead to liability for back pay, back taxes, and penalties, to mention a few.
How to avoid this
Understand the legal distinctions between employees and independent contractors. Also, ensure you have accurate job descriptions, employee handbooks, independent contractor agreements and policies and stay updated with employment laws to maintain a compliant workplace.
Working with a competent corporate lawyer will help you avoid these mistakes
Let’s face it: trying to remember all the stuff you need to comply with can be draining, especially since you are adding to an already mountainous workload. This is why you need an efficient legal team in your corner. Your corporate lawyer and their firm are experts in these issues, and they know what needs to be done and when it should be done.
Working with a corporate lawyer will take the load of legal compliance off you, freeing you to pursue the other aspects relevant to building the business of your dreams.
Please contact Serna Legal Services at 312-601-9859 or info@sernalegalservices.com if you’d like to learn more about protecting your business's trade secrets. If you’re ready to protect your trade secrets, we can work with you to help you protect your valuable intellectual property!
This content is published by Serna Legal Services, LLC and is available for informational purposes only and is not considered legal advice on any subject matter. By viewing this content, the reader understands there is no attorney-client relationship between the reader and the publisher. The content should not be used as a substitute for legal advice from a licensed professional attorney, and readers are urged to consult their own legal counsel on any specific legal questions concerning a specific situation
Comments