What Are the Top Legal Issues That Small and Mid-Size Businesses Face?

Every business will encounter legal concerns that will need to be addressed. Determining the best ways to handle these issues can often be difficult for small businesses or mid-size companies. These companies will most likely not be able to keep an attorney on staff, and they may only encounter legal concerns infrequently. However, addressing business law matters the right way can be crucial, and business owners will want to be aware of the issues that may affect them and their company. Some of the most common legal concerns small businesses face include choosing the right business structure, dealing with tax issues, drafting strong business contracts, and handling employee-related matters. 

Common Legal Concerns for Smaller Businesses

There are several types of issues that business owners and partners will need to address correctly, and failure to do so could lead to a variety of complications in the future, potentially resulting in significant financial losses or other consequences. Common issues include:

• Choosing the right business structure – During the business formation process, the simplest and easiest solution for a single business owner is often to establish a company as a sole proprietorship. If a company has multiple partners, it may be structured as a general partnership. While this will allow for greater flexibility, it can also put owners or partners at risk, since there will be no separation between their personal assets and business assets. This may make owners or partners liable for business debts, including situations where other parties pursue lawsuits or collections against the business. To avoid this, owners and partners will want to establish a formal business structure such as an LLC or corporation.
• Tax laws – Understanding business taxation can be difficult, but it is important to ensure that a company is paying the correct taxes so that it can avoid potential penalties. A business will need to make sure it is collecting and paying the proper sales taxes and that it is withholding and paying payroll taxes for employees. Owners and partners will also need to understand when to file business tax returns and whether quarterly tax payments will need to be made.
• Contracts – Agreements with vendors, suppliers, service providers, and clients should be legally sound, providing a business with the proper protections. Verbal or handshake agreements may seem easier, but the lack of a formal contract can cause significant difficulties if either party fails to meet their obligations.
• Worker classification – In some cases, it may seem easier and simpler to classify workers as independent contractors rather than employees. However, misclassification of workers can cause significant legal problems for employers. To avoid liability, business owners should clearly define the roles of workers and ensure that they meet all documentation and reporting requirements for employees.
• Diversity, equity, and inclusion – To avoid potential discrimination claims, employers will need to make sure they have equal employment opportunity policies in place. Any issues related to sexual harassment, complaints of a hostile work environment, or other forms of discrimination related to people’s race, gender identity, sexual orientation, age, religion, or other protected factors should be addressed promptly and effectively.

Contact Our DuPage County Small Business Attorney

Business owners and partners can take steps to address these issues and avoid potential problems by working with a lawyer who can serve as an outsourced general counsel. This can be an ideal solution for a small or mid-size company that cannot afford to have an attorney on staff. A firm that provides outsourced general counsel services can help keep a business out of legal trouble and save significant time and money in the long run. The Gierach Law Firm’s YourOGC program can provide your company with the legal help you need, ensuring that you are prepared for the challenges you may face in the future. Contact our Naperville general counsel lawyer at 630-756-1160 to get started.

Sources:

Entrepreneur

Inc.