While there is some truth to the notion that starting a small business on your own is easier than investing in a partnership or corporation, but one thing you need to remind yourself of is that small businesses also tend to be very vulnerable against legal issues. The reason is pretty simple: when the small business retains sole ownership, there always will be some risks with regards to personal liability since there exists no corporate structure. What this means is that there will be a tendency to mix up personal and business-related issues and problems.
This is the reason why even small businesses find a way to include the hiring of a legal expert or professional. It’s a practical move to make even if you have to spend money to pay for legal advice, because at the end of the day, it’s going to benefit you.
But then again, if you aren’t ready to do so or if your capital doesn’t allow you to spend more other than covering the business operations, then you might as well continue reading this post to learn some of the most basic legal tips intended for business safety and security.
Tip 1 – Be sure to check that your contract workers are considered as contractors, not employees. The reason is because IRS actually describes contractors and employees as very different. When you label a bunch of guys as contractors, be sure that you put it in writing and that they agree with their status before you hire them.
Tip 2 – Put an emphasis on paying all your bills pertaining to your business on time. This isn’t just about avoiding fees, but lawsuits altogether.
Tip 3 – Payroll tax must be paid on time, too. The last thing you want is to be held personally liable.
Tip 4 – If you enter into new contracts related to your business, be sure they are legally binding. The best way to do this is by having all contracts put into writing and signed.
Tip 5 – Be sure you are willing to disclose and be transparent when it comes to disclosure of earnings and financial information, and start right by issuing receipts every single time you sell goods or offer services in return for payment.
Lastly, if you don’t want to end up losing everything after just several years of business operation, it makes perfect sense to do something to protect your personal assets. There are certain measures you can take in order to protect your personal assets, including that of buying business liability insurance, forming a limited liability company, incorporating the same, and of course, doing the best you can to limit company debt.