Legal Issues for Small Businesses
By: Vlad Ehrsam

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.

Service Agreements – Conducting business involves drafting up a Statement of Work or a Written Agreement. Without a contract, it is difficult to enforce the law. Carefully draw up the business terms, draft it in the company’s favor, and provide flexibility and protection.

Start by listing the ‘scope’ of the service. For instance, cleaning a home would take 2-hours. In those 2-hours, list ‘what’ service and ‘how’ long it will take. Include anything that may be a special request. Excluding a portion of the service could be a costly mistake. Drafting a contract takes time, but it is necessary.

Employment Termination– To keep overhead costs down, a major percentage of small businesses begins with a low number of employees. Staff members come and go, as business growth changes. It makes no sense to keep staff on the payroll if the business can’t support the wages.

In order to avoid unlawful discharge law suits carefully select your employees and read up on the proper procedure for terminating employees. This may be a situation were you should immediately contact a corporate attorney.

If you need some additional help many small businesses choose to hire independent contractors. Hiring independent contractors can seem like a simple choice since you’re not responsible for reporting their earnings to 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.

Sole Proprietorship verses L.L.C. – Under many state laws, founding partners are jointly liable for the debts and obligations in general partnerships. Operating a business as the sole proprietorship puts the owner in a vulnerable position.

A better choice would be to start a business as a limited liability corporation. This means that if your business is sued, any personal finances and funds can be excluded from the ruling.

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.

Accounting and record keeping are vital to any company. Failure to do so can get you into serious trouble with the IRS. Keep proper paper and electronic copies of all business transactions.

Experienced Corporate Attorney – No matter what entity a business operates under, a growing business will face issues that require the service of an experienced attorney. Unfortunately, cost is a huge issue for most small business owners. Corporate attorneys do charge a much larger sum for their services.

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.

Without a doubt, a business should run erring on the side of caution. Choosing to operate without the proper knowledge on business laws and business ethics, will lead to disaster. Check with an attorney before pursuing a business and start on the right foot.

If you are at all unsure about any legal matter be sure to consult your attorney. Errors when it comes to your business’ legal issues are sure to lead to disaster.

Article Source: http://www.ArticleJoe.com

Vlad Ehrsam is the chief writer for, and editor of Full Info on Business, visit there today for the latest Business advice, and why not sign up for the free Business newsletter.
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