Home > Legal Guide

5 Common Small Business Legal Mistakes to Avoid

Starting your own small business is bound to be a process fraught with mistakes, but so long as you have the right people in place to offer you advice and the wealth of their considerable experience, you should be able to avoid the pitfalls commonly associated with launching a business enterprise. That said, one of the most important areas to address is legal issues since a big mistake in this area could tank your business before it really gets off the ground. Here are just a few common legal mistakes you’ll want to avoid when you start and run a small business.

  1. Failure to get legal counsel. Unless you happen to have studied corporate law, it is unlikely that you understand all the legal facets of launching a small business. For this reason you’re going to want to get some sound legal advice pertaining to pretty much every aspect of owning and operating your business entity. Of course, you’ll also want to secure the right kind of legal counsel. Just because you have a lawyer friend doesn’t mean you can turn to him for sound legal advice pertaining to your business, especially if he specializes in something completely different like divorce or criminal law, for example. You need an attorney that has a background in legal issues concerning your size and/or type of business if you want to get the best advice and legal services before, during, and after your launch.
  2. Neglecting to form a corporate entity. In terms of filing paperwork and paying fees, billing your business as a sole proprietorship or a general partnership is certainly going to come with less hassle and expense up front than forming a corporate entity. And yet, you’re taking a big risk if you elect to go this route. When you opt to create an S-Corp or LLC, you basically raise a legal shield that separates you and your business partners from the liabilities held by the business. So whether a disgruntled former employee, an unsatisfied customer, or someone injured on your property decides to sue, they can only go after your business and its assets for reparations – they can’t attack your personal holdings. Without a corporate entity you have no such legal protections. Also, depending on your business, forming a corporation could alter your tax obligations, potentially giving you additional ways to save.
  3. Failure to patent, trademark, and copyright. You probably want your original ideas, processes, and/or products to remain exclusively under your control, and this means taking legal steps to declare you the owner. Patents, trademarks, and copyrights make this happen. Without them, you may not have legal recourse should someone steal your idea and start making money off it (in direct competition with your business).
  4. Working sans contract. Boy, is this a mistake. Pretty much any business agreement should be sealed with a contract of some kind, including partnerships, hires, deals with suppliers, and any work you do for clients. These legal documents protect everyone involved and ensure that all parties are on the same page when it comes to business agreements. And if you’re looking for some help, don’t hesitate to check out contract services in your area or look up the LegalShield BBB business review in order to find the legal services you seek.
  5. Neglecting legal language. You’ve no doubt seen disclaimers on product packaging and notices online that allow visitors to opt out of being tracked in order to preserve their privacy. The reason for these notices, disclaimers, and other terms and agreements is to protect both your company and the consumer public. When you make people aware of what they’re getting into and warn them about possible dangers you are giving them every opportunity to make informed decisions. And so long as you do that, consumers will have a hard time suing you if they are somehow unsatisfied with your goods or services.
comments powered by Disqus