Don’t put your business at risk with these common legal missteps.
You work hard to make your small business distinct from other similar operations—especially those in the same industry and/or serving the same type of clientele—after all, differentiation is how you make your business stand out. But when it comes to small business legal blunders, you probably have more in common with your cohorts than you think.
There are many legal missteps for small business owners. We have narrowed it down to the five most common.
- Taking a do-it-yourself approach
Sure, you can get free legal documents on the Internet, but how do you know what you’re downloading is correct, that it contains everything it should and if the wording is appropriate? And once you have it, do you even know what it says? After all, legalese isn’t a language everybody speaks fluently.
- Not getting it in writing
Now is not the time to go old-school and take an oral agreement or a handshake approach. Yes, oral agreements can be binding, but good luck proving the terms of the agreement or that it even existed. Your rock-solid deal can quickly devolve into you said/they said situation, possibly leaving you on the losing end. An additional advantage of getting everything in writing is that the terms are laid out for everyone to evaluate. And later, if there’s a dispute, you’ll have one written document to refer to, rather than individual memories.
- Playing it fast and loose with employees
You can avoid potential legal issues with employees by simply playing it by the book. Unfortunately, this happens a lot. Employers get into trouble by cutting corners when it comes to pay, hours, conditions of employment and withholding taxes. This can cause a lot of legal trouble for the employer, but it’s also just bad business.
- Not having a buy-sell agreement
If you have co-owners or co-founders, a buy-sell agreement covers what will happen if one of them dies, becomes disabled or ill, wants to sell, goes through a divorce and so on. You need to clarify all of this when everyone is happy, healthy and on good terms. It’s much harder to reach an agreement or achieve a satisfying outcome when the situation has changed or become dire and fraught with emotion.
- Avoiding your lawyer
We recommend setting an appointment with your attorney at least once a year. Think of this like an annual physical for your business. Providing your attorney with a clear picture—whether you’re expanding, adding new products, entering a new territory or market, or having issues with employees—will ensure all legal angles are covered. There are two sayings that apply here. One is that ‘what you don’t know can hurt you.’ The other is that ‘you don’t know what you don’t know.’ So, take your lawyer to lunch once a year to talk about the business. And here’s a professional tip: If you buy lunch, they probably won’t charge you for the time.
Fivenson Studios is based in Ann Arbor, Michigan, our graphic design team specializes in logo and web page design, as well as marketing campaigns for social and print media. From flyers and brochures to targeted landing pages, we aim to bring your company into the spotlight and reach a greater range of potential customers.