We know that owning and running a small business can be a very rewarding experience.
However, running a small business comes with a lot more responsibility than what you’d experience as a regular run of the mill employee. You’ve got the overhead costs of running the business, employee management, marketing the business, and you’ve got legal issues.
The legal issues facing small business are some of the most important to take care of. In some cases, not addressing these legal issues could have very negative consequences for your business.
In this post, we’ve compiled a short list of some of the key legal issues facing small businesses around the world.
One of the key legal issues facing small businesses is handling taxes. Besides the fact that not correctly paying taxes could result in fines and even imprisonment, it can also crush your business.
One of the key determinants regarding how much tax you’ll pay is the kind of business structure you choose. Each business structure comes under a different tax bracket that affects how much tax you’ll pay and also what you can claim on tax.
It’s important you know what business structure is best suited for your business and then make sure you’re paying your taxes accordingly each month. Speak with a tax attorney or an accountant if necessary.
Expert advice is crucial here because this is an area you really don’t want to get wrong.
Every small business needs legally binding contracts. They need contracts for different types of employees including full time, part time, and casual. Contracts are also necessary for any outside contractors. These contracts need to stipulate payment, termination clauses, rights and responsibilities of the employee, and anything else deemed important.
It should also define the kind of behaviour you expect employees and even contractors to engage in. If employees violate this and engage in behaviours that damage the business then you’ll be within your legal rights to terminate their employment. It’s a safeguard every small business needs.
They will also serve to protect you if any lawsuits arise. If the other person signs a contract then you limit a lot of responsibility and damage you could face during legal proceedings.
Intellectual Property Issues
Many small business owners think that intellectual property issues are something that shouldn’t really concern them. They think it’s something that only big businesses deal with. However, it’s a big mistake to think like this.
Small businesses have issues with intellectual property rights just like any other business. In fact, there have been cases of big businesses ripping off the ideas of small businesses and then taking steps to get their own intellectual property rights protection.
This is not something you want to be dealing with. Find out in advance if you’ll need trademarks, patents, or copyrights. As usual, make sure you seek appropriate legal advice.
The bane of any small business.
Dissatisfied customers cause problems for many reasons. Obviously, there is the concern of bad word of mouth spreading about the business, there is a loss of profits, but then there are legal issues that can arise.
The big problem here is that if they’re determined enough, or dissatisfied enough, they could take out a lawsuit against your business. While this is completely impossible to eradicate, one thing you must do is use disclaimers with all of your products. This essentially limits any of your responsibility once they’ve purchased your product and places the responsibility with the customer.
If disputes do arise with a dissatisfied customer, the first thing to do is simply listen to their concerns and speak to them first. Quite often, just doing this will allow you to avoid any costly and complicated legal cases.
However, don’t be afraid to stick up for your business if you believe it’s right and they’re in the wrong.
Choosing The Wrong Business Structure
Choosing the wrong business structure can have some very serious ramifications and is one of the key legal issues facing small businesses.
Namely, it can impact on your own personal liability and even your assets. Many businesses start out as a sole proprietorship, however, this may not be in your best interest. If there are any lawsuits against your business then you’ll be personally liable and responsible for any losses.
Compared to if you register your business as a Limited Company, you actually create that legal separation between the business and your personal assets, and even responsibility to a lesser extent.
Final Words: Key Legal Issues Facing Small Businesses
These key legal issues facing small businesses are a big concern for many small business owners and we understand that concern. Unless you’re well versed in legal matters it can seem like jumping through a minefield.
The best thing we can recommend is to book a call with our legal team to go through any legal concerns you may have. It’s either that or play with fire by risking the future of your business.