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Be Wary of These Five Legal Issues Small Businesses Commonly Face

Running a small business is no easy feat. There are many considerations to make, from hiring the right employees to marketing your products or services to growing your business.

But you must not neglect the legal aspect of your business at all. It’s important to keep your business’ liability and legal risk at a minimum. This starts from securing your business license to setting contracts for your employees to dealing with your competitors.

Unfortunately, some business owners make the mistake of taking their business’ legal aspects for granted. As a result, they face legal implications, financial penalties, business shutdown, and even jail time.

If you’ve launched a startup, be wary of the five common legal issues small businesses face. Keep on reading to learn how to avoid these legal issues.

1. Business Licensing

Even before launching a startup, you must first secure a license to operate. Unfortunately, some business owners make the mistake of running a small business without a permit. As a result, they end up with legal fees that could have been easily avoided in the first place.

Keep in mind that licensing is vital for starting and running a business. Be sure to check with your local authorities to see what the requirements are and make sure to comply.

2. Intellectual Property

Forbes underscores the fact that a trademark is essential for small businesses. It is a symbol of your business image and identity. Your business name, slogan, logo, icons, designs, and other elements all represent your brand.

If you don’t get them trademarked, they might be stolen by the competitors in your industry. Or you might be accused of copying the brand and design elements of other businesses. Be sure to employ the use of patents and trademarks to protect your intellectual properties.

3. Employee Issues

Know that your hired employees are the lifeblood of your business. You must have hired them for some good reason. However, employing workers for your small business is a serious commitment. As a responsible business owner, you must always foster their overall welfare. If not, legal issues may arise such as the following:

  • Employee classification: Classify your employees based on the contract agreement and compensate them based on these.
  • Termination: Never fire your employees without legal grounds. If they decide to live, be wary of taking the right actions for legal termination.
  • Disputes on working hours: Be wary of issues such as unpaid overtime or asking employees to work for over their working hours without just compensation.

  • Discrimination: Discrimination is a big no-no in the workplace. Be sure to promote fairness and equality regardless of gender, religion, race, and even skin color.
  • Health and safety: As a responsible business owner, you are responsible for fostering health and safety in the workplace. Get rid of any potential hazards in your working site and provide worker’s compensation if you must.

4. Unlawful Acts due to Business Competition

If you run a small business, expect to meet a lot of competitors in the market. Business competition is great, which implies that you’re in a thriving industry. This means as well that you have all the chances to succeed.

The problem starts if and when the competition becomes dirty. You may be tempted to steal their business ideas or deliberately destroy their business reputation. On the other hand, they might accuse you of committing serious crimes against their companies.

If, for instance, you’ve launched a startup in North Carolina, you might need to hire a lawyer for your business. Should you get involved in legal issues, your attorney will help you get a bail bond and ensure that you won’t end up in jail.

5. Legal Disagreements of Shareholders

It’s a good idea to start a family business or launch a startup with your friends. However, it’s important to draw the line by defining the roles you assume. Be sure to have an official shareholders’ agreement if you’re all business owners.

In the event you and other shareholders decide to split up in business, you’ll have a fair and legal distribution of financial resources and other business assets. The last thing you want to happen is to have disagreements and bring these disputes to the court.

The legal aspect of your small business must be on top of your mind. First, be wary of legal issues revolving around licensing, intellectual property, employee concerns, business competition, and shareholders. Also, consider the pieces of legal advice discussed above to prevent legal issues from arising in your small business. Ultimately, hire a lawyer to keep your business within the bounds of law and always set your legal record straight.

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