Small businesses make up 99.7% of the workforce in the U.S. They are also prone to common and avoidable legal mistakes. To help we’ve put together a list of 6 steps to protect your business.
1. With so much information available online, it’s easy to thing we can handle everything ourselves. That’s why it’s essential to understand that there are some legal issues that absolutely require the assistance of an attorney. An experienced attorney cannot only get you out of legal trouble, but more importantly can keep you from getting into trouble in the first place.
2. In business timing is everything. Make sure to quickly address all complaints from customers, employees, or anyone else. Timeliness is a secret weapon to avoid small complaints turning into full-blown lawsuits.
3. Business owners often choose to form a corporation or a limited liability company to avoid personal obligation for business debts and liabilities. But sometimes the courts hold the owners, members and shareholders personally liable. When this happens, its called “Piercing the Corporate Veil.” However, courts are less likely to hold you personally liable if you properly capitalize and insure the business, comply with entity formalities including proper issuance of stock certificates, properly file the companies articles organization or incorporation, create bylaws or an operating agreement, and comply by their terms. Create a separate and independent bank account. Keep personal and business financial records separate. Document the reasons for the company’s capital structure and the level of capital used. Document all transfers of money or property between the owners and the company. Keep a balance between debt and equity that is appropriate for the company’s type of business.
4. You must also comply with a host of laws that define your relationship with your employees. This includes, hiring, on-boarding, performance, termination, and training. You also need to know which laws apply to your payroll, which records are you required to keep, how to avoid discrimination, and avoid wage and hour violations with independent contractors.
5. You can even be liable for employee behavior. To avoid these problems documentation everything. This includes any verbal discussion. A great way to do this is by following up with an email. Emails provide a time stamp, gives the other party an opportunity to clear up any misunderstanding, and puts it in writing.
6. If you wait for a crisis before talking to an attorney, it might be too late, an annual check up with your small business attorney is a great way to prevent this. Doing so can reveal traps, and provide tips to keep you in business for the long haul. If you have any questions, please feel free to give us a call. We are happy to help in any way we can.
We help clients avoid common legal mistakes with contracts, entity formation, or human resource issues. Legal costs and damages can cost $150,000! The financial hits of litigation can shut down a business. Dana’s 20 years of experience brings value and relief to small business owners who want to avoid court. Dana has made the whole process of “getting a lawyer” not only easy, but affordable with set pricing and monthly plans to spread out the costs of protecting the business.
Avanta Business Law 526 W Center Street, N106 Pleasant Grove, Utah 84062 801.851.5502 Avantabizlaw.com
