Small business owners can run into a wide variety of legal issues that aren't normally encountered with partnerships or corporations. This is due to the fact that many owners retain sole ownership of the business. And this sole ownership, without a corporate structure, often leaves small business owners open to personal liability issues. To avoid having business issues affect your personal non business related assets, there are a few legal tips you should follow when getting your business off the ground.
Ten Legal Tips for Business Safety
Running your small business means having to deal with a number of legal concerns. To avoid costly mistakes, remember these important legal tips:
- Make certain your contract workers are actually considered contractors and not employees. The IRS treats contractor and employee payment differently. To ensure those working for you are considered contractors, make sure they sign an agreement that states their status.
- Pay all of your bills on time to avoid fees and lawsuits.
- Pay payroll taxes on time to avoid being held personally liable.
- Make sure your contracts are legally binding by having them all in writing. This includes receipts for goods and services.
- To protect your personal assets, purchase business liability insurance, limit company debt, incorporate your company, or form a limited-liability company.
- Perform a trademark or patent search for all brand names or products you wish to bring to market. This will avoid hefty bills should a product contain a patented device or process and will also eliminate the frustration of having to rebrand a product and then reestablish its new name in the market.
- Protect your company's integrity by having employees sign a noncompete agreement upon hiring. This will prevent them from using your company's trade secrets. It's also a good policy to have employees sign an arbitration agreement so that you can handle employee-employer issues through an arbitration process rather than through a lawsuit.
- Provide terms of services agreements for customers detailing your precise obligations and the customer's rights with a product or service.
- Make certain you read the fine print of any contract before signing it as well as the terms of service agreement of any product used in your business. This can avoid unexpected costs and future product restrictions.
- Find a trustworthy lawyer, familiar with your particular industry, to handle common legal issues. It's also important to seek quality legal advice during a conflict with a partner, customer, or vendor to limit your legal liability.
Keeping Track of Your Business
Record keeping is just as important as remaining on the legal side of doing business. You'll want to prove your side of things in any conflict, so you'll need to maintain clear and concise records of your business dealings. For easy access and storage, make sure you get a good set of filing cabinets. If security is important, opt for locked cabinets. It may also prove valuable to maintain a second set of files off-premises in case of fire or flood.
For electronic documents, an external hard drive can provide you with plenty of backup space. You may also consider keeping an electronic copy off-site using a data storage service in order to give yourself the same protection for loss as you have with off-site storage of physical documents.
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