Starting and running a small business not only takes business savvy, but also some legal knowledge. There are classes available that can teach you about possible legal issues, but even those can’t give you the full spectrum of issues that small business owners face on a daily basis. Protecting your small business will contribute to the success of your business. If your small business finds itself in legal troubles it can be a serious disadvantage. Smart business decisions start with educating yourself about a few simple legal matters that can help keep your business focused on the business. Here are the top 5 most frequent mistakes you can avoid with your small business.
- Verbal Agreements: Please don’t rely on these. Written contracts and service agreements are so important to protecting your business in the event that you have to go to court. It is difficult for a verbal agreement to hold up in court. The drafting of contracts is also important in making sure that each parties risks and opportunities are clearly defined. Specificity is the key to a well written and signed contract. If drafted properly an agreement should provide reasonable protection for your company and its interests.
- Choosing the wrong business structure: If you decide to incorporate, there are several types of business structures to choose from: S corporation, C Corporation, Limited Liability Company (LLC), Limited or General Partnership and Sole Proprietorships. Choosing the right entity will help protect your business and personal assets. While each of these provides owners with limited liability for business debts and obligations, there are advantages and disadvantages to each. Choosing the wrong structure could put your business at risk.
- Failing to protect your intellectual property: Intellectual property refers to the trademarks, patents and copyrights and trade secrets of your company. Register your trademarks with your state and the federal government, patent your inventions, register your copyrights, and protect your trade secrets with employment and non-disclosing agreements. Intellectual property is often the most valuable asset of a business.
- Disorganization: Organized documents lead to accurate accounting records, which leads to proper tax filing. Proper tax filing lessens your chance of an audit and if you are audited, your files will be organized and readily accessible. If you can’t afford an accountant you may want to invest in a bookkeeper or an accounting program to make it easier to keep account of your daily transactions.
- Not getting liability insurance: When you own a small business, you have responsibility for your customers, staff and yourself. But you are also responsible for what happens when people use your product or service or set foot on your premises. If you get sued for personal injury or because of damage to property, you’re covered for the claim and the legal defense costs with most policies. If you are caught without, the legal fees may just put you out of business.
To help avoid making these mistakes you may want to seek the help of a business attorney. The business attorneys at Fisher Stark, P.A. have experience in drafting solid contracts, fair agreements, and business deals that allow small business owners to focus on their business and meet the needs of their customers and industry. We try to use our knowledge about what contracts go to court in an effort to draft contracts that keep our clients out of the courtroom. Call us today if you have questions about your small business, 828-505-4300.
We proudly serve small business owners of Western North Carolina and are available to the communities of Henderson County, Buncombe County, Haywood County, Catawba County, Transylvania County, Madison County and more.
Last updated 7/5/2015