5 Common Legal Mistakes That Could Destroy Your Small Business
If you are a small business just starting out, there are a lot of legal issues you must consider, and unless you have a law degree in business law, you probably don't know everything. If you want to protect your business from legal problems, check out these five common legal mistakes that could destroy your small business.
Choosing the Wrong Business Structure
One of the most important things to consider when forming a business is the structure. You can have a sole proprietorship, LLC, corporation, partnership and many others, and it is in your best interest to understand the pros and cons of which one you choose. For example, on the surface, a sole proprietorship and an LLC look similar, but that is far from true. When you have a sole proprietorship, the business is you, and you are the business. Any debts the business owns belong to you, and any assets you own belong to the company. An LLC typically keeps the businesses debt as part of the business, not you.
Being Unfamiliar with Tax Laws
Taxes are complicated, and many people don't even understand their own. However, when you own a business, there are new laws and rules you must follow. It's quite common for new businesses to forget to claim some of the income they receive properly. For example, in states with a sales tax, your business must report this money to the IRS. Similarly, payroll tax must be reported to the IRS too. At the very least, it's important you have someone within your company or someone you've contracted to help you with your taxes.
Failure to Have an HR Guide
It's also common for new small businesses to forget about human resources, especially if the business is extremely small. However, you should have some kind of HR guide for the employees. The HR guide must detail how employees are expected to act, and it can include everything down to the type of clothes the employees can wear. This is important to protect you in the future if a disgruntled employee decides to sue you. If you don't have an HR guide to prove your case, you can easily lose.
Forgetting About Copyrights and Trademarks
You need to know what types of copyrights, trademarks and patents you may need to protect your business. If your company makes a new, exciting item, but you have no patent to protect it, a bigger business can simply steal it from you, and because they have more money, they can fight you in court and with the customers. You should even have the name of your business protected so it can't get stolen. At the same time, be mindful of any copyrights or trademarks you might accidentally infringe upon, such as by posting another company's logo on your website.
It's so easy for small businesses to make big legal mistakes that can devastate the company. That's why it is extremely important you have your own attorney skilled in business law. Your attorney is your best friend at ensuring your company follows all laws. For more information about business law, contact a lawyer t a law firm like Souders Law Group in your area today.