Business ownership is the dream for many people across the U.S. and beyond, but far too often, people tend to get involved without knowing the full breadth of issues involved. Sometimes, this means not knowing your audience or a typical business issue. However, sometimes this also means exposing yourself legally to reprisal or ramifications. Here are some of the common examples of things that a small business owner may encounter legally.
What Do I Need To Look Out For?
Choosing A Legal Structure
It’s important when setting up your business to choose something that makes sense. This effects your personal liability and your taxes. Here are some common examples:
Sole proprietorship: This is when you own and run an unincorporated business by yourself and do not set up a legal entity. You have total control of the business and receive all of its profits, but you’ll also be responsible for all of its taxes and liabilities.
Partnership: A partnership is similar to a sole proprietorship in that owners are personally liable for obligations and debts. However, it exists between two or more individuals who share the profits and losses of the company.
C corporation: This type of corporation is viewed as an independent legal entity separate from its owners, who are considered shareholders. If shareholders of the corporation are sued, they are generally only liable for their investments in the company and not personal assets.
Limited liability company (LLC): An LLC is not taxed as a separate business entity, like corporations are. Instead, profits and losses of the business are passed through to each member of the LLC. Owners also have limited liability for business debts and obligations. Regulations vary by state, so you should check your local regulatory office if you are interested in starting an LLC. For further guidance, it may be a wise idea to seek the help of an attorney or a certified public accountant.
When an employee is dismissed, you need to be careful that they don’t have proper cause to say that the dismissal took place on grounds of discrimination or another murky legal area. If you terminate a non-performing employee, make sure he or she signs documents carefully drafted by an attorney upon termination to make the terms of dismissal crystal clear. A human resources department or equivalent of it is also important to make sure that you can prove that you hire or fire without regard to gender, ethnicity or age.
Regulations are generally made for your own good, but this doesn’t change the fact that it can mean expenses that you don’t have. One example of regulations gone right is the Clean Air Act of 1990. This forces you to remove air pollutants, and your vehicles’ contribution to smog, gas and other chemicals that crush the ozone layer. Another example of compliance is advertising regulations.
It’s tempting to make your product sound good, but there’s a fine line before your claims are fraudulent. The Federal Trade Commission applies these regulations to both online and print advertising. In advertising, honesty is the best policy. This isn’t just to play things safe legally. Provide the service your customers expect; when they see that your business is “the real deal” your ads claimed, you’ll dramatically increase the number of lifetime customers who buy again and again. It is possible to do well while doing good.
What Do I Do?
In general, it’s good practice to prepare ahead when it comes to handling legal issues. This is best done by researching your industry of choice and knowing exactly what type of issues that you deal with. The previous examples are good general issues, but there will be business-specific issues like this you will encounter.
When legal issues get out of control, it is important to consult a skilled attorney. As you can see, many of these issues vary, but a common one is vehicular accidents, particularly if driving is an important component of your work or business. The people at Noll Law Office are experts in car accident law in Illinois, and make a great asset if you need help in this area. Whether you are in the midst of a legal challenge or just want to be prepared, doing your homework is one of the most important steps you can take as a business owner. This means not only knowing what you need to do to succeed, but how to handle obstacles in your way.