Running a small business can be challenging and time-consuming, as there are plenty of things to keep in mind. Being a business owner is a 24/7 job, and since that’s the case, it leaves much room for making mistakes. Now, with some mistakes, the company can live with, but when it comes to legal pitfalls, it’s good to know what’s must and what you should never do.
1. Not keeping the documentation properly
Each employee needs to bring the necessary documentation in order to sign the contract and become a part of the company. What is important for every company is to save copies for each of them and make portfolios of each employee. Many forget to keep the necessary documentation or do not sort them well, and it can cause serious problems and even lead to the closing business.
Because of that, it is one of the common mistakes that need to be avoided, and if not, it can lead to severe legal consequences. Today, doing so is much easier than just a few decades ago, as now you can store all the data online or in a cloud and have a digitalized version and copy of all important papers that you might need at all times.
Yes, doing all this might be time-consuming, but that’s precisely why it’s so crucial, as it can really save your company from having any legal troubles.
2. Not signing contracts
The contract is a legal obligation, and people who have signed it need to do what they have agreed on, or they will face legal consequences. Because of that, it is necessary to understand what a valid contract is and which of them do not have any meaning. There are many forms that can be found online, and it is enough to file and sign them, which is pretty simple, and many new business owners use them.
But, it is important to check if they are valid in your country, and if they are not, they are literally the same as shaking hands and agreeing only verbally. A contract can be a strong weapon if it comes to a legal battle, but it is crucial to check before signing and make sure that it is valid in your country.
3. Wrong business structure
Even though this is one of the basics of running any company, it’s still something that happens a lot. Namely, this is where it all starts, as determining the business and ownership structure is the essence of your company, and making any mistakes here can have disastrous effects. Everything should be clearly stated and determined, from the legal and tax liability to whether and which investors are welcomed.
Even a word, phrase, or a sentence that can be understood in many ways can lead to or cause a legal problem in the future, which makes creating a business and ownership structure something that you should be entirely sure about before you start.
4. Forgetting about licenses and permits
Starting a new business is never easy, and running it can be even harder, especially if you need some special license, insurance, or permit. Although it should not be that difficult to get the necessary permits if you are doing everything by law, many people forget about it, and it can cause severe problems.
It might look like a small mistake, but having the necessary license means you are doing everything properly, and not having it means completely the opposite, which is enough to get you to the court and even shut your business. Because of that, it is important to do the research and check which licenses or permits your business needs before starting it since it is the only way to avoid many serious problems.
5. Not checking laws about advertising
In order to place your products or services to potential customers, you first need to know who is the most interested in those products/services. It is the only way to avoid spending money on a marketing campaign that targets the wrong people. Advertising is of vast importance, and today more than ever before, you need to understand the market and customers in order to keep up with the competition and gain profits.
As for the legal pitfalls well, companies often overstep a clear boundary regarding marketing. The main problem here is that every country has its own specific laws regarding advertising and what you can and cannot do. So, before starting a marketing campaign, make sure to check the law and whether that marketing strategy is within the legal limits.
6. Forgetting about taxes
Filing a tax report is an obligation that should not be neglected, and not doing it can eventually cost you a lot of money or even spend some time behind bars. Tax laws are not easy to understand, and what is even worse, they frequently change, which causes even more problems for new companies.
Many of them do not have enough money in the beginning to pay the taxes, and on the other side, many do not understand what they should do. It can lead to severe consequences, and it is much better to avoid them than to deal with them. If it seems too complicated for you, you can always hire a professional to help you with filing tax reports, and if you do not know where to find the best possible one, visit this website.
7. Not protecting intellectual property
The best way to stay safe and avoid any legal issues is by having a strong contract that keeps all confidential and sensitive information, well, confidential. There are several ways to protect intellectual property, but one of the best and easiest is by a simple requirement called signing the NDA. Before, this was not that big of a problem, but today, you simply need to protect what you have.
The bottom line
Mistakes happen, but some hurt more than others, and when it comes to legal troubles, it’s never a good idea to leave this segment as something to do last. Learn from mistakes, but with these tips mentioned above, make sure to learn from the mistakes of other people and company owners, and regardless of how simple something might seem, if not done, checked, or stored properly, it is a legal pitfall waiting to happen.