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Several factors contribute to the growth of a business. This includes hiring the right employees, using effective marketing approaches, providing high-quality products or services, meeting customer demand, having a competitive edge, and so on. Nonetheless, if legal regulations are not observed, the aforementioned factors may fail to save a company. It is essential to ensure that your business follows crucial legal steps to avoid costly mistakes, whether it is a startup or an established one.
Here are 8 ways to avoid business legal issues:
Determine the Correct Business Structure
The primary business structures are sole proprietorship, partnership, C corporation, S corporation, and limited liability company. They operate differently and offer exceptional benefits. Determining the most suitable one for your business is vital. It will be best to hire a lawyer to help you make the right call, especially if you don’t understand each in-depth.
Understand Local Laws
You should be aware of local laws since they affect businesses. For example, some zoning laws restrict certain types of businesses from operating in a region. Breaking commercial zoning laws can lead to legal issues. A lawyer can help you learn about the local regulations to follow. These laws can also apply to home-based businesses.
Protect Your Idea
Your business invention is your intellectual property. Accordingly, you should protect it from being stolen. This can save you hours of filing lawsuits. A trademark or patent attorney can help you with this aspect.
On the other hand, you should also not steal another company’s idea. For example, when naming your business, research to confirm if your chosen name or logo is already in use by another business that owns its trademark.
Trademark infringement is a legal issue that can consume your money and time considerably. Hence, it is best to avoid it by creating a unique brand identity, which you should trademark.
Register Your Business
Your business should be registered and licensed to operate in your local state. This can protect you from high penalties in the future. Each local typically has a department of state which allows applicants to register their companies online, making work more manageable. Submit the required documents and fees. After the stated number of days, your business will be registered officially, and in turn, you will receive your license.
Create Contracts
You need different types of contracts when running your business. This includes employment contracts, partnership agreements, nondisclosure agreements, B2B contracts, non-compete agreements, investor contracts, loan agreements, and landlord leases.
Make sure that you have airtight contracts that protect your company. Online templates can guide you on creating a professional contract, but you need to tailor it to your company needs. Your contracts should state the company’s terms and conditions clearly. In addition, they need to be current and have methods for resolving disputes.
An attorney should go through all your created contracts to adjust elements that can disadvantage you. They should also go through any contracts you receive before signing them.
Handle Discrimination/Harassment Cases Competently
If an employee reports a discrimination or harassment case, handle it competently. These cases can be based on gender, age, sexual orientation, religion, beliefs, disability, national origin, race, immigrant status, color, marital status, and pregnancy. Do not dismiss any complaint as it can lead to legal issues. It is important to have policies in place for solving such issues.
Provide a Safe Work Environment
Employers are required to observe safety and health standards to provide a safe work environment. Additionally, have a list of procedures that employees should follow to prevent injuries and other damage. This applies to all businesses, regardless of your industry or operations.
Terminate An Employee Carefully
Dismissing an employee unfairly can result in a lawsuit. You may need to have a justifiable reason for termination. Examples include consistent underperformance or incompetence, breach of contract, frequent unexplained absences, theft and other illegal activities, intoxication at work, discrimination against co-workers, and dishonesty. It is important to give the employee an advanced notice with an opportunity to cure any deficiencies, prior to a formal termination. It can be beneficial to consult a lawyer before employee termination.
A significant percentage of business legal issues are preventable. Employers should work closely with a lawyer(s) in all business operations to avoid costly lawsuits.
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