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Legal Issues for Small Businesses

By: Vlad Ehrsam Small business owners make legal mistakes all of the time, which often results in the downfall of a company. Without the proper knowledge, business owners find themselves repeating the same mistakes. The SBA (Small Business Association) stresses the importance of ending the circle of disastrous legal errors by investing in Continuing Education business courses, or by hiring a business consultant.

There are many resources for legal advice and information available on the Internet. If you think that you need professional legal advice consulting a lawyer is the best course of action. But here are a few common legal issues that you may come across.

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.

Your service agreement should definitively state exactly what you’re agreeing to do and the specifics of that. It should detail the definition and scope of your service. You should also define what is not included in your service and if any extra charges may be applicable. Don’t leave anything out.

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.

Since labor taxes can be so high many small business owners choose to hire independent contractors. Independent contractors are required by the IRS to claim and file themselves. You may think this makes things much easier on you.

You should know that some jobs are actually considered to be an employee’s job regardless if it is done by an independent contractor or not. The IRS has its own definitions that you should be aware of before hiring any independent contractor. Protect yourself and your business and be fully aware of any legal ramifications before making any business decisions.

Sole Proprietorship verses L.L.C. – Under many state laws, founding partners are jointly liable for the debts and obligations in general partnerships. Operating a business as the sole proprietorship puts the owner in a vulnerable position.

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.

No matter what sector your company is in you need to be concerned with intellectual property issues. It is important that you know and understand the term and issues surrounding copyrights, registered trademarks, confidentiality agreements, and invention assignment agreements.

Record Keeping – Improper record keeping can cause serious problems. Accurate accounting records are essential if the IRS is the least bit suspicious about the company’s financial records. Invest in a bookkeeper or an accounting program to make it easier to keep account of your daily transactions. Also, organize files to be readily accessible in case of an IRS audit.

You may want to hire a bookkeeper or accountant to deal with accounting issues. If you can’t afford to do so be sure to take a course on business accounting to ensure you have proper records of everything.

Do your research and compare fees. The long term relationship you build with your corporate attorney will have its value. All businesses should make an investment in a “good” corporate attorney.

Without a doubt, a business should run erring on the side of caution. Choosing to operate without the proper knowledge on business laws and business ethics, will lead to disaster. Check with an attorney before pursuing a business and start on the right foot.

If you are at all unsure about any legal matter be sure to consult your attorney. Errors when it comes to your business’ legal issues are sure to lead to disaster.

Article Source: http://www.lifeweightloss.com

About the author: Vlad Ehrsam is the chief writer at Full Info on Business, it's one of the webs most up to date Business sites, their free newsletter is well worth signing up for too.
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