There are several legal issues to consider when running a small to medium size business. Discover the 5 common legal business mistakes to avoid here.
Business owners are busy. You're trying to keep multiple balls in the air each day, and you're probably thinking about ways to grow your business. But if you're making one of these legal business mistakes, you could be in trouble.
Don't Make These Business Mistakes
We all make mistakes. But when it comes to the legalities of business, you simply can't afford to make some of them. If you've made some of the following business mistakes, it may not be too late to fix them:
1. Failure to Trademark
This should ideally be completed before you select your business name. Do a search online through the U.S. Patent and Trademark Office. This will show you whether anyone else is using your business name.
Once you have a logo and name, it's crucial that you trademark it. Otherwise, you could spend thousands of dollars and hours of work developing your brand and have it stolen from you. If you want to be sure you're dotting your I's and crossing your t's, it's a good idea to use a trademark lawyer.
2. Working without a Contract
Many business owners have been here. You begin manufacturing a product or working on a project, and the client doesn't pay. Or the client keeps adding additional tasks and holding the money above your head.
Working without a contract is one of the worst business mistakes you can make. If your client fails to pay, you have no way to get that money back. Contracts also ensure that everyone is on the same page at the beginning of the working relationship. You'll know exactly what the client expects, and they'll know when they need to pay and when they own the deliverables.
3. Using the Wrong Business Structure
Some business structures include:
- Sole proprietorships
- S corporations
In order to choose the right one, you'll need to understand the pros and cons of each option. If you're a sole proprietor, there's no difference between yourself and your business legally. That means your personal assets are fair game if you're ever sued. But becoming an LLC or corporation comes with responsibilities and costs. You'll need to be sure that your business is ready and you're willing to invest the money and time maintaining it as a separate legal entity.
4. Not Seeking Legal Advice
It's much better to seek legal advice when you have a question than it is when you're about to be sued. Some business owners try to save money upfront by doing the paperwork themselves. But this can end up costing you a lot more in the long run. Hiring a lawyer will often be cheaper than you think, and it will usually save you a lot of time, money, and stress.
5. Not Documenting Employees
Once you begin hiring employees, it's crucial that you have the right documents. Federal law requires all business owners to have copies of specific documents for each employee. If you don't do this, not only could you be shut down, but you could face jail time.
As you can see, these are some serious business mistakes. However, many can be fixed with the help of a professional.
Need a trademark lawyer? Get in touch today to learn how we can help.