For small businesses, legal matters can have a great influence on the survival and growth of the business. Many business owners neglect to take proper precautions and only realize their mistakes when legal consequences present themselves. More often than not, legal troubles can be avoided simply by taking precautions. Is your business in need of a legal checkup? Here are a few pointers to help you protect your business:
Choosing the right business structure
Before setting up a business, you need to understand how the business structure can affect the tax treatment, ownership interest, and personal liability. A sole proprietorship is simple to set up but offers no liability protection. That means if the business faces debt or lawsuits, the owner’s assets are also at stake and can be claimed by creditors. A partnership can also be risky because each partner is responsible for the other’s actions. Both partners will put their personal assets on the line. If the tax and reporting requirements associated with an LLC or corporation is not an issue, these structures are often recommended to offer better liability protection to business owners.
Classifying your employees and contractors
As the owner, you need to determine if you are bringing an employee or a contractor on board. Each status may affect how the staff should be paid, their benefits and tax indications. You can find out how to properly classify your workers following the IRS guidelines.
If you hire employees, be sure that you understand and comply with the wage and hour laws dictated by the Fair Labor Standards Act (FLSA). This includes the regulations concerning overtime payment. You should also check whether your state or local city have any law governing the wage and employment standards that exceed the federal requirements.
Getting sufficient coverage
As a small business owner, you have probably heard of different types of business insurance, including general liability, professional liability, and home-based business insurance. Depending on the nature of your business, you may need the certain combination of coverage. Talk to a professional to help you determine which coverage you need or should have.
Legal checkup on your contracts
Many legal checkups only concern the startup process of a business, however, it should be an ongoing process. Every time you sign a contract, it would mean entering a new legal binding agreement. Without knowledge of contract laws, you may face unfavorable terms or sign a contract that is not legally enforceable at all. Have a LegalShield law firm review your contract to avoid unpleasant surprise down the road. It is always easier to have your contract reviewed than trying to undo certain terms later.
You never know when you are required to show a certain contract, sales receipt or other agreements. These can be proof of your compliance with tax law, employment law or to prove the validity of a business transaction. So be sure to develop a system to maintain accurate records of your business activities.
Protecting your intellectual rights
If you are an artist, your works including written texts, photographs, or designs are protected by copyright laws. The copyright started at the completion of the work. Trademarks, on the other hands, protect the names and words that identify a business and its products. If you produce an innovative product or invention, you would need the patent law protection to prevent unauthorized reproduction. Unlike copyright, patents and trademarks require registration. Businesses need to take proper steps to protect their patents and trademarks.
Starting a business takes a lot of resources, time, and effort. It is important that you do regular legal checkup to protect your business. Talk to a LegalShield representative today to learn how you can get legal protection for your business.