Starting a business can be an invigorating, stressful and unforgiving experience. Between juggling all of the needs surrounding employment and securing proper inventory, substantial investments are often required to legitimize an idea into something more. Needless to say, entrepreneurs want to guarantee success for their endeavors and avoid any unnecessary hardship.
However, a veritable field of landmines exist for small business owners who may not fully understand all of the requirements associated with business ownership. One wrong move and all of that effort can come crashing down around you. As such, ensuring that your small business avoids legal trouble is a vital part of the entrepreneurial process.
Today, let’s examine 4 specific tips for keeping your small business out of legal trouble and in good standing with all local, state and federal authorities.
Use Existing Services to Legitimize Your Business
How much research and effort have you put into determining the legal status of your business? Many entrepreneurs start with a dream and a vision, but fail to grasp just how much paperwork and regulation exists to achieve that process legally. There’s arguably no greater concern than determining which type of business structure to register as – did you know how many different types exist?
From sole proprietorship to LLCs and partnerships, every small business must weigh these options carefully. Each offers various forms of legal shielding – which is why knowing about all of them is so important. If you’re an entrepreneur seeking to pursue the easy way to start your new company, then knowing the difference between these structures can save you money, time, legal problems and scandal.
Existing business services designed to optimize the formation of your small business can offer other benefits as well. For example, minimizing your tax liability by choosing the appropriate structure can sometimes make the difference between profit and loss. As such, investigate these options carefully – even if your small business has already been launched, you may be able to reformulate to gain an upper hand.
Enlist Financial Advisors to Avoid Unexpected Penalties
Complicated tax situations exist; it’s just a reality that small businesses face. As such, it’s vital that you enlist the services of financial advisors, accountants and other similar individuals to ensure that your financial house is in order.
Whether it be audits from the IRS or state-level inspections, enlisting the services of a full-time accountant who can provide advice and properly prepare quarterly tax reports is an integral part of any small business. Don’t leave yourself open to legal action; keep a financial advisor on retainer at minimum to avoid this fate.
Know the Power of Contracts
Everything your small business does should be in writing. Without written guarantees, any vendor, employee, contractor or advisor arguably has no reason to uphold the agreements your business has set forth – what a scary thought!
This is why the power of contracts and written agreements is so often embraced by businesses. Whether you are negotiating non-disclosure agreements for employees or securing long-term arrangements with vendors, contractual obligations are a must for any small business.
At minimum, these provide your business with legal recourse in the event someone negates their responsibility. Likewise, contracts can also protect you from legal malfeasance in the event an irritated vendor or employee decides to act against your interests. By having contracts and agreements for every task and interaction, your business won’t be open to legal challenges that would otherwise be deemed frivolous.
Invest in All Relevant Forms of Insurance
Safeguarding your assets – and even your existence – is a vital component of small business livelihood. There are many different forms of business insurance available, depending on your virtual or physical presence, with whom you interact and what services you provide.
Basic liability insurance, property insurance, home business insurance, vehicle insurance, business interruption insurance and workers’ compensation insurance are a few examples. To learn about all the types of business insurance available, click here. Securing the types of insurance available to your exact business model will secure you from many forms of legal action if certain situations arise.
Now that you know how to safeguard yourself against legal trouble, there is no excuse not to embrace these tips. While a litany of potential problems can arise for small businesses, these legal issues are among the most common.Act accordingly, and secure your financial future against any potential hazards.