Legal Issues for Small Businesses

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.

Contracts or service agreements are a must for any small business. It is difficult to uphold a verbal agreement in court and therefore a well written service agreement can protect you and your business. The service agreement should clearly define all policies and agreements. It should provide protection for your company and its interests.

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.

Disgruntled ex employees may threaten to sue you with a wrongful dismissal suit or similar legal action. It is vital that you know your rights and what you can do in this type of situation.

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.

Use extreme caution assigning tasks to the company’s IC’s. Some projects can change the status of an IC to an Employee in the IRS’s eyes. If you’re uncertain as to what jobs classify as IC or Non IC status, visit your local state website or www.sba.gov for more information.

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.

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.

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.

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.

Choose an attorney that you’re comfortable with and can afford. It is important to build a relationship with your attorney so that in times of need he or she will better understand your situation.

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.moneyarticlelibrary.com

Vlad Ehrsam is the chief writer for, and editor of 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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