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Common Legal Issues Facing Small Business

When you start a small business, you want to do things the right way, but there is a lot on your plate, and most of it, well, you simply have never done before. For many small business owners starting their business is uncharted territory.

Starting a small business is an exciting step and there is a lot going on! In the excitement, and the miles-long to-do lists, it is easy to overlook some of the important legal steps you need to take to protect yourself, and your business.

This list will introduce some of the common legal issues you may face as a small business owner and how you can make sure you are doing things the right way.

One of the hard parts of starting a business is that, at the beginning, you often do not have much money, and making sure you are legal, well, it costs money. But, for many of these issues, the cost of doing things the right way is small, and well, well worth it.

Here are the issues you may face: 1) Not Getting the Proper Licensing, 2) Choosing the Wrong Business Structure, 3) Not Hiring Employees the Right Way, 4) Using Poorly Written Contracts (Or no Contracts at All), 5) Failure to Protect Intellectual Property.


1. Licensing Requirements

When it comes to the government, there is one main, really big thing, it cares about, and that is, if you are paying taxes. And thus, to ensure your business pays its taxes, City, State, and County governments keep track of your business by requiring it to obtain business licenses.

Failure to obtain licenses can lead to big fines, or worse. Fortunately, these licenses are typically easy to obtain and affordable. But if you have questions, talk to a lawyer for help. Sometimes (especially at the country level) requirements can be difficult to understand.

2. Business Structure

There are a lot of different ways to structure a business and choosing the right one can be confusing. This is a question you will want to ask a lawyer. Often the answer will be, form an LLC, but that is not always the case. Getting your business structure right at the beginning can save you a lot of headaches.

This is not an expensive issue to talk to a lawyer about and structuring your business right can protect your families assets, thus, this is a step that is well worth taking.

3. Employees

Eventually, if things go well, your business is likely to start adding employees.

At this point you need to make sure you have your paperwork right to avoid costly issues down the road. Always have an employment contract for your employees.

This contract will protect both your business and your employees and will save you buckets of cash should there be a legal dispute later down the road. An employment contract should outline items like, responsibilities, rights, benefits, salary, reasons for termination, and more.

Properly drafted contracts are important, but there are a lot of other considerations when hiring employees. Talking to a lawyer and an accountant is a good idea when your business reaches this point.

4. Contracts

This world is run on contracts. These crucial documents are the basis of your business. Contracts protect your business in the case of lawsuit, define the terms of agreements, and ensure that you get paid.

Always have a well-written contract for any agreement your business makes.

Do not sign a contract without reading it first. This is especially important as a small business owner. You need to know what you are agreeing to.

Talk to a lawyer for help in reviewing and drafting contracts, well-written contracts are so crucial to the success of your small business, as is knowing exactly what you are agreeing to, before you sign a contract.

5. Failure to Protect Intellectual Property

Your unique ideas and products are what will drive your success, but those ideas and products need to be protected or else some other business can start using them. Talking with a lawyer early on can help you protect what makes your business unique and ensure your success's are used to your benefit.


Look, I get it, I recommended you talk to a lawyer for every one of these issues. But getting it right on these issues can make or break your business. There is a lot to keep track of as a small business owner, and you can try to do everything yourself, but finding an affordable lawyer, that you trust, can make a huge difference.

As a small business owner myself, I know how overwhelming it can be, having the legal knowledge I have allows me to rest easy knowing my personal assets are protected and knowing that I am doing things the right way. You can have that same peace of mind.

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