Legal Mistakes to Avoid as a Business

There are a number of actions that should be avoided as a small business owner. To stay in the clear, avoid some of the more common legal mistakes listed below.

Not Creating Company Guidelines

A company handbook isn’t just “something to have that seems official.” It is a document that creates guidelines for any number of situations while setting boundaries for a company. When these guidelines are not in place, there’s room for lawsuits from employees when something goes awry because nothing official was in place. Employee guidelines in an official document are critical for the functioning of all companies. We offer plenty of services to help you start your business off on the right foot.

A Lack of Exit Planning

No one wants to think about the end of their business, especially when just getting it off the ground. However, when no exit strategy is in place, chaos can ensue when a founder leaves or the company disbands. Working with an attorney to draft an official, legally binding exit strategy should be at the top of every business owner’s priority list. Read more about how to keep a business break-up from being painful.

Failing to Patent, Trademark or Copyright

Your intellectual property belongs to your company. When it’s not protected, others could take it and use it to their own gain. There are legal steps to overcome this, but they can be costly and lengthy. Be sure to discuss options for trademarking, patenting or copyrighting your intellectual property with an attorney. You may be surprised what you’re able to proactively protect.

Leaving Customer Data Wide Open

Just because your website seems secure, doesn’t mean it is. Major hacking scandals involving mega corporations that hire the best security teams have been regular news items lately. If you collect any personal information from customers or clients, it should be protected. Research options for protection and speak with your attorney to ensure your customers’ data is safe.

Not Appropriately Vetting Investors

If you’re in a tough spot financially, it might seem like accepting funds from any willing investor is worthwhile. Unfortunately, investors have rights in your company and may have different ideas about how things should be run. Working with the wrong investor could be the lethal downfall for any business.

Failing to Remit Taxes

It’s your responsibility as a business owner to understand the taxes that you must collect, including sales and payroll taxes, and remit to appropriate government agencies. When a business owner fails to do this, the business can be shut down quickly. Consider speaking with an accountant to ensure you’re collecting the proper taxes and that you are remitting them properly and within the right time frame.

Not Establishing the Proper Structure

S-Corps, Partnerships, LLCs and other legal structures exist because businesses need to protect themselves. They provide structure for investors, legal options when partners part ways or when trouble arises with a customer or client. When a small business owner or entrepreneur fails to establish the proper legal structure, they could face trouble in the future.

If you take notice, you’ll see that most of the mistakes listed above stem from not taking the appropriate action in the beginning. The good news, is that if you act proactively, you can prevent major trouble in the future. If you’re unsure of where you stand in a certain area, have questions or want to be sure you are protecting your business to the best of your abilities, speak with an experienced business law attorney, like Michael Hynum today.

If you’re ready to move forward, check out what kind of business law services we provide, and then contact us to set up a consultation. We look forward to answering your questions and working with you to protect your business.