Even small businesses will have legal problems from time to time, which is why it is important to put a few legal safeguards in place to prepare for such inevitabilities.
The most pressing legal safeguards were presented in a recent blog post from mobile payments company PayAnywhere. While they will not eliminate the potential for legal concerns, they will drastically reduce their likelihood and make them easier to manage if they do surface.
Legal Safeguard #1: Incorporate
By incorporating your business you safeguard your personal assets from falling victim to the ramifications of professional legal concerns. Speak with your financial and/or legal advisor to determine whether C-Corp, S-Corp or LLC is the best direction for your business.
Legal Safeguard #2: Get All Contracts And Agreements In Writing
A shocking 40% of small business owner’s legal problems arise from challenges associated with contracts. This could be a lack of a contract, contract negotiations that go awry, or partners not living up to the full terms of their contract. For this reason it is essential that you have detailed contracts with all of your vendors, suppliers, and applicable clients—with built in procedures for out-of-the-ordinary circumstances—such as severe weather and holidays.
Legal Safeguard #3: Payment Arrangements
If you have a business in which you invoice your clients and wait for payment, it is essential that you clearly defined your payment terms. This should be discussed both when taking on a new client, and should be included on your invoice—as well as in a contract as mentioned above in Legal Safeguard #2.
Legal Safeguard #4: Have Legal Counsel In Place
As a small business owner you may not be able to afford to keep legal counsel on retainer, nonetheless you need to have an established relationship with a business attorney so that you have someone to turn to when the need arises.