Common legal issues for businesses

The Most Common Legal Issues For Businesses

Linkilaw Business Structures, Company Law, Startup Advice & Tips

Any business will face legal issues at some point. An important aspect of the successful development of a business is to anticipate and tackle common legal issues in a proper and timely manner. That’s why we’ve made a list of the most common legal issues that arise for businesses.

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We want to help you have a legally healthy business so we’ve divided the possible issues into two categories – things that can happen before your company’s incorporation and after the incorporation.

Before Incorporation

These occur during the set-up phase of your company. Here are the common legal issues you will definitely face when starting your company.

  • Choosing your business structure

Choosing a business structure is certainly one of the most common legal issues all businesses face.

When starting a business you should first decide on how to structure your company. You have to decide whether to register a sole-proprietorship, partnership, limited partnership, corporation or limited liability company.

Your choice will depend on liability considerations, as well as the best formula with regard to tax laws. It also depends on your team and the focus of your operations. It’s advisable to talk to a lawyer who can help you clarify the different options and their ramifications.

  • Define relationships within the company

At this stage, it’s important to regulate the relationships within the company, clearly and properly distributing liabilities and responsibilities. Make sure you put everything in writing. Clearly define ownership, employment, and partnerships (if applicable).

A good idea is to sign a Shareholder’s agreement. You can find out more about creating a customised agreement here.

Without proper legal documentation, it’s almost guaranteed you’ll experience this common legal issue in the future.

  • Business licenses

Depending on what your business does, you have to apply for licenses in order to operate lawfully. At the very minimum, you will need a business licence and a tax registration. If the activity you’ll be performing is specifically regulated, you will need to go to the relevant associations and authorities to obtain permits to operate.

  • Incorporation Procedure

The process of incorporation is usually simple in order to stimulate the creation of new businesses.

However, it requires all of the steps to be diligently followed, by providing the necessary documents and information, as required by law. Incorporation laws differ from country to country so you should take your time to understand what is needed.

Common concerns include the choice of a name that is available for use, registering the appropriate business structure to suit your business needs etc.

After Incorporation

After you have incorporated your company and you start operating, there are numerous legal issues you may face. For the purposes of listing the most common legal concerns for businesses we have used the SMEs & The Law l Survey on Biggest Legal Concerns in 2015.

  • Late Payments
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More than 11% of the businesses that took part in the survey stated one of the most common legal issues they faced was late payment from contractors and sub-contractors. Many of these issues can be quickly resolved through the Small Claims Court system.

  • Taxes

After you’ve incorporated your business, one thing you should consider immediately is taxes. Almost 9% of all small and medium businesses last year faced legal problems concerning taxes making this one of the most common legal issues.

You should register with the tax authorities and coordinate your accounting procedures, to make sure you comply with all tax laws that are applicable to you.

  • Employment

Every company that has at least one employee has to carefully consider the proper regulation of the employee-employer relationship. Seek legal advice to make sure you have proper employment contracts and that you comply with the national employment laws that are applicable.

If your relationship is not perfectly outlined, you are potentially facing claims for unfair dismissal, breach of contract or discrimination. Make sure that you also comply with the health and safety regulations on the workplace, since this is another common issue for businesses.

According to the survey, more than 8% of the companies tackled employment issues in 2015. That makes this one of the most common legal issues every business must be aware of.

  • Contracts

Contract law forms the basis of any legal relationship. Therefore it is not surprising that almost 7% of all businesses that took the survey had contract issues during the last year. Managing and drafting your contracts carefully can save you a lot of trouble in the future, so it’s advisable to have all your legal agreements checked by a solicitor.

This is one of the most common legal issues every business must avoid.

  • Intellectual property

If you create content or develop new products or services, you will definitely face IP issues. Every business needs to protect its ideas and identity. About 5% of the companies faced IP issues. Therefore it’s of high importance to take the necessary precautions to protect your intellectual property rights.

Anything novel that you create can be protected by either patent laws or copyright laws. Your business identity, on the other hand, can be protected by trademark law. This will include names, logos, designs etc.

Make sure you seek the advice of an IP lawyer on time, otherwise you may lose your competitive advantage and your ideas.

Want To Avoid These Common Legal Issues?

The surefire way to avoid such common legal issues for businesses is to always speak with a legal expert. There is really no other way to know that your business is in the clear.

Book a call with our legal team and make sure you’ll avoid these common legal issues.

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