Frequent legal issues small businesses face – how to avoid them?

Let us know the legal issues small businesses face. Entrepreneurship is an exciting, risky and rewarding journey. Once you step into building your business, you get bombarded with loads of issues. A study by Semrush says, “there are 582 million entrepreneurs in the world”

As the business climbs on the mission of expansion, then follows the series of legal issues.

We aim to get you acquainted with these issues beforehand. If you are currently facing any of these issues, we got you covered.

Enterprises can economically afford law firms hence most of the decisions they take on a regular basis are compliant friendly.  But with small and medium businesses things are usually different.

This article will help you to be prepared for upcoming legal issues in small businesses, beforehand. This helps in better task management and keeps the business out of legal disputes.

Frequent legal issues small businesses face:

•         Overtime disputes:

When business is in the high months, employees have to most often work overtime some days. If this is the case, make sure you have your policy in the hand and your employees know each word of the policy. This will help employees in setting the right expectation. You do not have to worry about the compensation at the eleventh hour. This also helps you to keep finances on track and keep the business away from any legal problems. It is unlikely, a satisfied and well-informed employee will go and file a case again the business.

•         License:

You need to be very much aware of all kinds of Government licenses you will need to run the business. You can contact your local government for the approval of the license. Each business needs different types of licenses on the basis of their business activity and type. You can ask your lawyer about the licenses you will need to stay away from any legal dispute.

•         Trademark:

This is one of the most common legal issues small businesses encounter. Research extensively before you finalize the name of the company. Whenever, you are about to launch any product or service under your name, make sure no one else has done it before. It is highly likely someone else has already launched it. Because it does not matter even if you are making an honest mistake. The offence is an offence.

•         Copyright issues:

If you are running an online business, you might face copyright issues frequently. Copying digital content such as videos, images or blogs seems easy and hence is frequently done. Plagiarism is a strict offence and you should not overlook it. As per copyright rules, no one is allowed to copy the document irrespective of the form of content. You have your rights to your content, if your content is being copied you must take action against this.

•         Shareholder’s agreement:

Many a time Small-medium businesses are trapped into a shareholders agreement. Shareholder agreement refers to the agreement made between the company and shareholders. It encompasses all the rights given to shareholders and the rules about selling shares. Shareholders of small businesses tend to make decisions on behalf of the company without having the right to do so. This disorganizes the organization impacting the business. Make sure to have your shareholders’ agreement signed by all shareholders in place.

•         Business policies:

Business policy is the pillar of any business. Irrespective of how good a relationship you have with your employees, make sure to have a policy in place. These policies help employees set the right expectations and also work as a ‘ how we work’ guide. Small businesses usually ignore the policy and later get into legal trouble.

•         Firing Employee:

Firing an employee gets nastier especially if you do not have a contract signed by the employee while hiring. Many times you hire employees only to realize they are not fit for your business. You might not like their work quality or the new employee just does not fit in the team gradually decreasing the team productivity. In such cases, it is important to remove bottlenecks. If done using the right documents, you will face fewer legal repercussions.

•         Misclassification:

One of the most frequent legal issues small businesses face is wrongly classifying the workers. Your business might have multiple types of workers such as full-time employees, part-time workers, independent contractors, etc. If you are classifying a permanent employee as an independent contractor, you might get into the most complex legal troubles. To operate safely you can either strictly read and understand the Government rules to classify workers or take the help of legal consultation from experienced professionals.

•         Selecting the wrong business structure:

There are ample business structures in the World such as sole proprietorship, Limited Liability Company, partnership corporations, etc.  . Small businesses usually select the business structure only on the basis of their business activity and a number of shareholders. If you are one among them, you might face legal issues. If you live in Qatar, you can refer to this blog to know your business structure.

•         Discrimination among employees:

You might not know what is going between employees unless you put the effort into establishing a healthy work culture. Discrimination between employees on the basis of gender, origin, sex is another frequent legal issue small businesses face. To avoid it you should regularly conduct meetings and keep a vigilant eye on the team. Make sure you are offering equal employment opportunities. You can also have an anti-discrimination cell where employees can drop their issues. It is wiser to resolve such issues without getting into legal troubles.

•         Lack of clear idea on offerings:

Clients do not state clearly their requirements and it gets difficult to offer services that keep them satisfied. To avoid such scenarios be very clear about your offerings in the contract. Assuming things most often ends up in a bad situation. So, always put an extra effort to know your clients. Before offering the product or services make sure your clients know what to expect for their money. This is why a legally correct contract is very important.

Hey, did you got a precise idea of the frequent legal issues small businesses face? If your mind is still clouded, you can quickly get on a free call with Puvanesvarar Mailvaganam. He has been helping multiple businesses get out of legal troubles since 2004.