Seven Legal Issues Small Businesses Face
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Seven legal issues small businesses face
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According to NevadaSmallBusiness.com, there are seven legal issues that small businesses face. Let’s dive in and take a look at exactly what those are.
- Licensing
One of the most common issues small businesses deal with are licensing. Making sure that you’re in line with your local government’s requirements for business licensing has become absolutely vital. Otherwise, you could find yourself facing large and unreasonable fees that could be avoided easily.
2. Trademarks
Another surprisingly common legal issue small business face are trademarks. Make sure to do lots of research ahead of time when naming or renaming businesses or launching a new product. ‘If you can think of it, there is always a chance that you’re not the only one who has” (NevadaSmallBusiness). You want to make sure that you don’t find yourself in legal trouble because you infringed on someone else’s trademark.
3. Employee Termination
Far too often, we as business owners hire people who appear to be far more qualified than they really are. You also could find that they simply don’t fit in with the other employees at your office. In order to decrease your chances of legal repercussions you need to take the right precautions before terminating anyone. How do you start this? Spell out the terms of employment in an employee manual and documenting any disciplinary actions involving the employee. Should there be any doubt about what you should do, you can consult your attorney.
4. Misclassification
In regards to classifying your employees, as far as the government is concerned, you need to do it correctly. According to the Federal Department of Labor, “"The misclassification of employees as independent contractors presents one of the most serious problems facing affected workers, employers and the entire economy.” Be sure to read the DOL guidelines, and contact the department of labor in your state for clarification.
5. Shareholders’ Agreement
If your company has one shareholder, or an army of shareholders, you need to have strongly developed agreements. If one day the business is split up or sold, and there is not an agreement in place, legal battles will likely ensue. Even if the shareholders on on good terms while the company is up and running, it can turn bad quickly. It is never a good idea to leave any gray area when it comes to who gets what. The agreement needs to be drafted, or at the very least, overseen by a lawyer with experience in such matters.
6. Overtime Disputes
Ensuring that you have clear overtime rules and that you approve all overtime prior to them working past set hours are critical to staying out of legal trouble. Not only will this provide you with financial control, but it could save you from a lot of trouble. According to Black Enterprise, “Overtime lawsuits have slowed down a bit over the past couple of years, but they are far from over. The Fair Labor Standards Act permits employees to recover all unpaid overtime, liquidated damages, if warranted (which usually amounts to 2 times the overtime compensation owed), plus attorney’s fees. If the employee is able to win even $1 from an employer, the employee could recover all of his or her attorney’s fees, which may be substantial.”
7. Litigiousness
Yes, that’s a real word. It means, “excessively or readily inclined to litigate,” (Dictionary.com). Essentially, you can control this one yourself. Don’t just rush into lawsuits, because this could mean you have to pay legal fees, and as you can probably guess, without Access, this will add up quickly. If you can find a way to settle disputes outside of a courtroom, do it. Consult an attorney if you have questions about any legal issue.
See more at: nevadasmallbusiness.com
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