top of page

5 common legal mistakes small business owners make

Writer's picture: Administrative SupportAdministrative Support

As a small business owner, you know that running a business is extremely challenging difficult and overwhelming at times. It requires a lot of time, sacrifice and determination on your part. One area that can be particularly difficult to navigate is the legal side of running a small business. There are many legal issues that small business owners need to be aware of, and unfortunately, it's easy to make mistakes.


In this blog post, we will discuss five common legal mistakes that small business owners make and how to avoid them.


1. Not properly registering your business


One of the most important legal decisions when starting a small business is the type of business entity you choose. Different business entities have different tax obligations, legal liabilities, and reporting requirements. Failing to properly register your business can have serious legal and financial consequences. For example, if you operate your business as a sole proprietorship, you may be personally liable for any debts or legal claims against your business. To avoid this mistake, make sure to properly register your business with your state's secretary of state or other relevant agency. Consult with an attorney or accountant to determine the best business entity for your needs.


2. Failing to properly classify employees


Small business owners often rely on independent contractors or part-time employees to help run the business. However, it's important to properly classify these workers to avoid legal issues down the line. Misclassifying workers as independent contractors instead of employees can result in penalties for failing to pay taxes and provide benefits. To avoid this mistake, make sure to properly classify your workers based on the guidelines set forth by the IRS and your state.


3. Not having proper contracts in place


Contracts are an important component of any business relationship. They set and define expectations and protect both parties in case of a dispute down the line. However, many small business owners fail to properly draft and execute contracts. This can leave them vulnerable to legal disputes and financial losses. To avoid this mistake, make sure to have contracts in place for any business relationship, including with vendors, customers, and employees. Consult with an attorney to ensure your contracts are legally sound.


4. Failing to protect your intellectual property


Intellectual property, such as patents, trademarks, and copyrights, can be valuable assets for a small business. However, failing to properly protect your intellectual property can result in costly legal battles. Make sure to properly register your trademarks and copyrights, and consider working with an attorney to apply for patents. Additionally, be vigilant about protecting your intellectual property from infringement by others.


5. Ignoring employment laws


Employment laws can be complex and ever-changing. Failing to comply with these laws can result in costly legal disputes and penalties. Some common employment law issues that small business owners need to be aware of include:

  • Wage and hour laws, including minimum wage and overtime requirements

  • Anti-discrimination laws, which prohibit discrimination based on race, gender, age, and other protected characteristics

  • Workplace safety regulations, such as OSHA requirements

To avoid this mistake, make sure to stay up-to-date on employment laws and consult with an attorney or HR professional if you have questions or concerns.


In conclusion, small business owners face many legal challenges. By being aware of these common legal mistakes and taking steps to avoid them, you can protect your business and ensure its success. Make sure to consult with an attorney when necessary to ensure that you are complying with all applicable laws and regulations.


If you have any questions or concerns regarding your case, please feel free to contact Tchamda Law.


Is there a topic you would want us to cover? Let us know by leaving a comment below.



5 views0 comments

Comments


bottom of page