What Are Common Legal Issues That Businesses Face?
Managing a successful small business can be a lot of work, especially in the early stages, when many difficult financial decisions must be made. The biggest ones pertain to what owners plan to spend their limited budget on. Given that resources can be tight, it is understandable why some elect to avoid some big-ticket items, like hiring a lawyer. While that may seem to make sense in the short-term, it could wind up costing the company much more in the long run. There are several common problems that impact all companies that a knowledgeable lawyer would be able to help the firm avoid.
Do I Have the Right Structure for My Business?
One of the first things that an entrepreneur and their partners must decide on is the structure of their business. This is extremely important because it could have serious tax liability issues. Establishing the correct structure will save a company several severe headaches going forward. Some of the different types of structures include:
- Sole proprietorship
- Limited Liability Company (LLC)
Each one of these structures handles the liability and tax responsibilities of the owner in a different way. An LLC, for instance, separates the two and treats them as two different entities. Owners should research the different corporate structures thoroughly before deciding on which to choose.
What are Some Employee Issues I Need to Consider?
Even if the structure of the company is secure, another common problem that all companies deal with is managing employees. One of the biggest aspects of that is deciding how to classify them and verifying that their classification matches their level of responsibility. There are three main types of classifications, which are:
Full time employee: This type of employee is someone who works more than 30 hours a week. The company is obligated to offer health insurance, Workers’ Compensation, and other benefits.
Part time employee: These employees work a maximum of 30 hours a week and are usually not eligible for benefits, although a company can offer them if it elects to. Independent contractor: This is a person who operates outside of the structure of a particular office and works independently. They are responsible for paying their own Medicare and other taxes, and are not eligible for some universal benefits, like Workers’ Compensation.
Deciding how to classify employees can be a tricky action, as misclassifying someone can lead to litigation later on. The best way to avoid any problems is to evaluate a job description ahead of time and decide what the hours and responsibilities will be, then classify the position based on the added costs of potentially paying for benefits.
If that position cannot be fully funded, the company may have to do without it until it can find the funding somewhere else to pay for that position. The legal costs further down the road are not worth cutting any corners with a person’s pay or benefits.
What Type of Paperwork Should I File on a Regular Basis?
Maintaining a business is more than just keeping employees and customers happy. There is a significant amount of paperwork that must be filed with both the state and the federal government on an ongoing basis. If a firm is publicly held, it could fall under the jurisdiction of the Securities and Exchange Commission (SEC) on the federal level and state regulators. Regardless, the company will be under an obligation to file certain documents, including:
Financial statements: These documents contain a snapshot of the firm’s financial status, including its income statement, balance sheet, and statement of cash flow.
Financial information: Any data that the company chooses to post about itself on its website.
Annual reports: These are issued to shareholders once a year.
Prospectus: A document that describes the investment offering for the public. What Should I Do if I Have a Contract Dispute?
While contracts are supposed to be binding agreements between two or more parties, there can be disagreements between those parties over one’s actions. It may also be necessary to break a contract because the two sides no longer wish to work together anymore. To avoid a messy legal dispute, it is best to thoroughly review any contract before signing it. All parties should include language that grants them an easy escape should certain violations take place, or some other action occur, such as one of the two sides is arrested or has some other public embarrassment.
TLG Help Small Businesses with Legal Matters
If you are facing legal hurdles within your small business and need help finding a legal remedy, reach out our Office For an initial consultation, call us at (516) 470-1379 or text at (516) 581-8456 .Visit our website at trivedilawpc.com/ for more information.
Written by:Nehal Trivedi