Small Business Legal Mistakes To Avoid

If you’re a small business owner who knows little about the legalities involved with running a small business you’re not alone. The Small Business Association recommends that small business owners take one if not several legal classes in order to familiarize themselves with potential legal issues. Not knowing where you stand in certain legal matters can leave you at a serious disadvantage. Get to know your rights so you can make smart business decisions.

In today’s world of technology, several resources offer up-to-date material on business procedures that directly affect the legitimacy of a company. The following are a list of common mistakes and ‘how-to’ avoid repeating them.

Service Agreements – Conducting business involves drafting up a Statement of Work or a Written Agreement. Without a contract, it is difficult to enforce the law. Carefully draw up the business terms, draft it in the company’s favor, and provide flexibility and protection.

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.

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.

Start a business as a L.L.C. (Limited Liability Corporation) instead. This will eliminate the risk of loosing personal funds due to allegations in a lawsuit.

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 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.

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

About the author: Vlad Ehrsam writes exclusively for Full Info on Business, it's one of the webs most up to date Business sites, why not sign up for the free Business newsletter.
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