Avoiding a Common Legal Mistake in Business Annapolis MD
College Park, MD
Avoiding a Common Legal Mistake in Business
Provided By:Author: saurabh
Small business owners make legal mistakes all of the time, which often results in the downfall of a company. Without the proper knowledge, business owners find themselves repeating the same mistakes. The SBA (Small Business Association) stresses the importance of ending the circle of disastrous legal errors by investing in Continuing Education business courses, or by hiring a business consultant.
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.
In each service agreement you should list in detail what your service encompasses. Be very specific and don’t leave anything out. A signed contract is a very important legal document and can stand up in court. Also be sure to add what is considered an extra service and what the charges would be. Make sure that you don’t leave anything out of your service agreement.
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.
Hiring Independent Contractors – To avoid some of the hefty labor taxes, small business owners hire Independent Contractors to take up the slack. IC’s (Independent Contractors) are responsible for claiming their income and expenses and filing with the IRS.
Even though you may have hired an independent contractor the IRS may consider their job to be that of an employee’s. This means things could get complicated for you. Be sure to check what the IRS considers employee’s jobs before hiring an independent contractor.
When starting your business you need to know how your business is classified. You may be a sole proprietor or perhaps in a partnership. Each of these designations carries its own legal ramifications. For instance as a sole proprietor you are vulnerable to legal action taken against your company.
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.
Intellectual Property Issues – Even low-tech companies have intellectual proper issues that directly affect the long-term success of the business. Pay close attention to confidentiality and invention assignment agreements, registered trademarks, and copyright notices. Protect the company’s trade secrets adequately.
If you don’t want problems with the IRS, good record keeping and accounting is essential. You can cause serious problems for yourself and your company if you don’t keep records 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.
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