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Legal problems that small businesses may face and ways to deal with them properly

All businesses face legal problems; Small businesses often focus on everything but the legal stuff. There are many legal issues small businesses may face and ways to handle them properly. Here are the highlights:

  • It is important to hire employees using a contract that defines both his rights and his responsibilities; Helps prevent unnecessary lawsuits in the future. Creating the right business structure for a small business and obtaining the right type of license is crucial; Failure to do either or both could result in serious fines or lawsuits, or even cause the business to close

  • Intellectual property protection is vital to a small business. Unique products and services, marketing plans, etc. help attract customers and must be protected by copyright, trademark or patent.

  • Not hiring employees the right way Many small businesses start with one person either making something or providing a service, often from their own home. As the business expands, it becomes necessary to hire employees. One common mistake new small business owners or entrepreneurs make is hiring employees with an informal verbal agreement (or handshake).

  • Not entering into a signed agreement or contract is a good way to open a small business up for lawsuits in the future. The owner and employee may not have problems for some time. However, some problems may appear at some point. Without any kind of documents stating the rights and rules of the employee, the likely outcome is a very messy and expensive court battle.

Make sure there is a contract from the start. The contract must include information about when the employee was hired, as well as specifying:

Paying salaries
Possible reasons for termination
The date of signing the contract
Failure to obtain the appropriate license

Every company must have an appropriate license to operate. There are different government requirements for each type of business. Conditions vary according to the size, type and location of the work. A business license can also be affected by the goods or services that the business provides. Failure to obtain the proper license can, at best, result in small businesses incurring large fines and fees. At worst, it could cause the business to shut down. Licensing can be confusing and can be especially difficult for an employer who is new to the business world. It may be a good idea to hire a lawyer who specializes in small business. He will be able to navigate through the paperwork and help the small business owner obtain the appropriate license.


Choosing the wrong business structure
There are a variety of different structures a small business can be incorporated into. They include partnerships, corporations, sole proprietorships, and limited liability companies (LLCs). For example, if a small business is set up as a sole proprietorship, the owner's personal assets (which include the business itself) are at risk in the event of a lawsuit against the business.

Again, it is important to hire an attorney who can assist the small business owner in determining the most appropriate business structure for his or her business.

Non-protection of intellectual property
Small businesses often come up with excellent ideas, products, and marketing plans. However, failing to patent, trademark or copyright them means another company can swoop in and claim them. It is often the unique ideas and merchandise that small businesses come up with that make them so attractive and attract customers.

It is important to protect intellectual property. Sit down with an attorney or business consultant and determine what can and should be protected by copyright, patent, or trademark.

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