Avoiding Common Legal Mistakes

If you own your own small business chances are you know very little about the laws and regulations that you encounter on a day to day basis. Understanding the legal issues that concerns small businesses it is vital to your business’ success. The small business association suggests that all small business owners take a few legal courses to understand the legal issues you may come up against. However many small businesses ignore this advice and suffer consequences that could have been avoided.

There are many web sites that offer legal advice for the small business owner. Here are just a few situations that may arise where you should know your legal rights. In all these situations you may find it necessary to contact an experienced corporate attorney.

For most business transactions you want to create and sign a contract. Contracts or service agreements allows you to define what your services or products entail. Service agreements are an important way that you can protect yourself and your business. Don’t overlook this important aspect of small businesses.

In each service agreement you should list in detail what your service encompasses. Be very specific and don’t leave anything out. A signed contract is a very important legal document and can stand up in court. Also be sure to add what is considered an extra service and what the charges would be. Make sure that you don’t leave anything out of your service agreement.

At some point you may need to hire or fire employees. Many small business owners are unaware of their rights and their employee’s rights. Even though you may only have one employee it is important that you are well versed in labor standards and other regulations. If you need to terminate one of your employees it is vital that you do it properly.

In order to avoid unlawful discharge law suits carefully select your employees and read up on the proper procedure for terminating employees. This may be a situation were you should immediately contact a corporate attorney.

If you need some additional help many small businesses choose to hire independent contractors. Hiring independent contractors can seem like a simple choice since you’re not responsible for reporting their earnings to the IRS.

Even though you may have hired an independent contractor the IRS may consider their job to be that of an employee’s. This means things could get complicated for you. Be sure to check what the IRS considers employee’s jobs before hiring an independent contractor.

When starting your business you need to know how your business is classified. You may be a sole proprietor or perhaps in a partnership. Each of these designations carries its own legal ramifications. For instance as a sole proprietor you are vulnerable to legal action taken against your company.

A better choice would be to start a business as a limited liability corporation. This means that if your business is sued, any personal finances and funds can be excluded from the ruling.

Intellectual property issues should be of great concern to any business no matter what sector you are in. This means you need to understand copyrights, registered trademarks, invention assignment agreements, and confidentiality agreements. Protect your company and its property.

Accounting and record keeping are vital to any company. Failure to do so can get you into serious trouble with the IRS. Keep proper paper and electronic copies of all business transactions.

If you can’t afford to hire an accountant there are many bookkeeping software packages that can make things easier on you. Be sure to keep all of your paper documents as well since they may be necessary should you be audited.

At some point you may need to consult with an experienced corporate attorney. While most attorneys do charge a high fee, there are many situations where it may be necessary to do so. Sometimes there’s no substitute for professional advice.

Be sure to find an attorney that you’re comfortable with since you may need his or her services in the years to come. It may be wise to meet with several attorneys before you choose one.

If it anytime you feel in over your head, consult with an attorney. Business owners can get themselves into very serious trouble without the proper legal knowledge.

Vlad Ehrsam is the chief writer for, and editor of Full Info on Business, there's a wealth of knowledge on the website, plus why not sign up for the free Business newsletter.
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