9 Simple Legal Tips to Save Your Small Business Today

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Written By SeanCarlo Lopez

If you are a small business owner or employee, then it is important to understand the legal aspect of what you are doing.

Many small businesses neglect to do proper legal research on the front end and wind up paying for it through litigation or taxes. Take some time to consider these legal tips and see how your business measures up.

Please note that when it is time for you to gain official legal advice, consult with an experienced attorney. These legal tips are important reminders, but they cannot substitute for nor do they constitute professional legal advice.

That being said, these legal tips can get you thinking correctly about your business and the legal issues surrounding it.

1. Form And Register Your Business

As you may know, businesses can take a number of different legal forms, which affect employment, taxes, and litigation.

If you have a for-profit business, chances are that it will be a sole proprietor proprietorship or a limited liability corporation. It is important for you to study the differences and determine the form that is best for your business.

Don’t forget to officially form as soon as possible. If your business has no legal formation, then the consequences of litigation can be tremendously devastating to you. Thankfully, it is easier than ever to form your business.

Finally, once you have formed, register your business name with your state. This way, your name is protected and can be used for whatever you need.

2. Get Agreements In Writing

9 Simple Legal Tips to Save Your Small Business TodayWhile some believe that a verbal agreement is good enough, they may sing a different tune if they ever need to go to court. Get in the habit of getting all agreements you make in written form, and then keep track of them.

A written agreement is essentially a legally-binding promise. While you may never have to or want to refer back to them, they are good to have.

For every client that you take on, get a written agreement of what you are going to do for them, and how much it is going to cost them. Whenever you outsource work to a freelancer or independent contractor, sign a written invoice for the work.

3. Document Everything Legally

This is especially true if you are working in a helping profession or with a vulnerable section of the population. Document everything that you can as a way to limit liability if legal issues come up.

Install cameras on your business’s property and regularly review the footage. Keep anything that you need to.

When you are performing client work, write down the steps you are taking in every job that you perform. For every purchase made from your business, get a physical or digital receipt into the hands of you and your customer.

Keep your official business license and documentation where you can access it. When you take on employees, keep track of their employment eligibility and tax documents.

It is far better to have documents and not need them, than to one day need them and not have them.

4. Understand The Importance Of Your Signature

This is an important tip for your personal life as well, but it is especially true for your business. When you are at the head of a business, your signature carries legally binding consequences that affect you and your employees.

Never sign anything unless you fully understand what your signature means. It may take more time to study documents that require a signature, but your name in the script at the bottom could be completely irrevocable. It is better to do the hard work on the front end for whatever you are signing.

Have you ever heard the phrase, “An ounce of prevention is worth a pound of cure?” Your signature, which takes all of two seconds to perform, could have far-reaching consequences beyond your current knowledge. If you have to bring in an expert to read a document and then explain it to you, then do it.

5. Get Started On Taxes Early

The best time to prepare for tax season is always right now. Consult with a professional so they can give you the best advice for bookkeeping. If you find taxes are overly confusing or difficult, bring in an expert that you know, like, and trust as soon as possible. You don’t want to wait until it’s too late to begin.

This goes along with the tip about documenting everything. You should develop a system for tracking all of the money in, and all of the money out for your business. Consider investing in bookkeeping software or a freelance accountant to make things easier.

6. Study Your Local Rules And Regulations

9 Simple Legal Tips to Save Your Small Business TodayWhile there are some universal rules about your business, such as a federal minimum wage and employment eligibility to work in the U.S., the rules of doing business could vary in the specifics.

Make sure that you are aware of the ins and outs of business regulations for the state in which you are registered.

This is also something that you can bring in an expert for. Spending some money on a legal consultation when you are starting out may seem like a sacrifice, but it will cost far less than getting fined or even shut down depending on the infraction.

7. Don’t Follow Your Gut

While it may be important to follow your instincts with certain decisions in life and business, the law is not one of them.

Your instinct may seem right at first, but then actually be dead wrong. Many business owners have ended up getting hurt because they made a decision or a commitment that seemed like a no-brainer at the time.

If you get into a legal situation, do not make any decisions with your gut until you have had the chance to speak to a professional. This is especially true in situations that seem small. They could have factors that you are not thinking about because it isn’t your area of expertise.

8. Understand The Rights And Protections Of Your Employees

Again, these can vary depending on your location, but every employee has certain rights and protections. If your business is formed as a corporation, this even includes you. Nobody should have a better awareness of the rules surrounding your employees than you, the owner.

Everyone at your business is entitled to things such as accommodation, health, safety, and pay, but it goes far beyond the basics. You need to know the protections surrounding things like vacation and leave. It is also important to understand how rules surrounding discrimination affect your business. 

You will want to fully understand the rights that independent contractors have. This is certainly an area to bring in outside help to make sure your business is in alignment.

9. Protect Your Data

9 Simple Legal Tips to Save Your Small Business TodayThis legal tip has increased in importance as more commerce is conducted online. It is almost guaranteed that some aspect of your business, if not most of it, involves the internet. Is your data secure?

At the bare minimum, make sure that your password is strong. Also, make sure that any website you put personal data onto is secure. Then, make sure that your own website is secure for your customers.

Going from there, make a commitment to understanding cybersecurity for your business, whether you consider yourself a tech whiz or not.

The risks and potential costs are too high. Consider enrolling in a basic cybersecurity course, or bringing in an outside consultant to look at your systems.

The time is now

This article has talked extensively about many of the things that could go wrong or things you may not be considering. Don’t be discouraged, however. Gaining an awareness of the issues at work in your business is the first step to legal safety.

Take some time to identify an area or two that you could work on, and then implement it into your business.

The best time to gain an understanding of legal issues is well before you have to. Do your best to be prepared, and don’t be afraid to ask for help!

Further reading:

  • When it comes to legal matters, JJS Justice can help you protect your business interests and legal rights.

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