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  Carmel Business Leader

 

Protect Your Business from these Legal Pitfalls
John Walls, Legal Affairs Columnnist

When small business owners encounter legal trouble, it is usually something that could have been prevented with a modicum of planning and preparation. Not surprisingly, entrepreneurs often fail to seek the advice of legal professionals: after all, they are independent and self-reliant by nature. Unfortunately, this tendency can lead to some undesirable outcomes.

Here are three common legal pitfalls and miscues:

  1. Failing to properly form themselves into the right corporate structure.

When done correctly, this can limit liability to the corporate or entity’s assets while protecting the business owner’s personal assets. There are several options to forming your business, but the worst thing you can do is fail to take advantage of these legal instruments. In most cases, they are relatively easy and inexpensive to set up.

  1. Failing to use clear written agreements and contracts.

This allows legal recourse in case things go wrong and can allow planned flexibility if conditions change. This applies to contracts for work, partnering agreements, sub-contractor agreements, and much more.

  1. Failing to properly deal with employees.

Have employees acknowledged their at-will status? Also, make sure you understand which employees are entitled to overtime compensation. Many believe they know this information and find out too late they were wrong. It is among the fastest-growing areas of litigation today. You probably need at least a basic employee handbook. In many cases, a fairly small collection of policies and procedures will suffice.

There are many more common mistakes, but these are three of the most prevalent. Most are avoidable with minimal time and cost by seeking the advice of an experienced business attorney. The result will not only be fewer potentially expensive surprises, but also the peace of mind knowing you are prepared in case something does go wrong.

Originally printed in Carmel Business Leader, September 2007 | 1/3. A Times-Leader Publication, in partnership with Current Publishing, LLC.

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