When starting up and running a small business, as an owner, you’ve got lots of things to consider and do like getting a location, hiring employees, setting up systems and stocking products. Unfortunately, legal matters are one of the last things small business owners think about, but these issues can actually cause the most headaches – and may even lead to your business’s demise.
Here are five common legal mistakes that business owners make and what you need to do to avoid them. As with any legal issue, make sure you talk to an attorney for their advice on the situation.
- Not incorporating. Unfortunately, you’re opening yourself up to personal liability and possible lawsuits if you don’t have your company set up with the right legal structure. What you can do: Research the various legal structures, like LLC, C or S Corporation. File the appropriate paperwork with your state offices.
- No shareholders’ agreement. While you may be friends with your business partners, disputes can occur, especially when someone leaves or you want to sell the business. What you can do: Have an attorney draft an agreement that outlines the shareholders’ rights and obligations as well as how to handle disputes.
- No human resources (HR) manual. Even small businesses need an HR handbook, so employees knows what rules and regulations employers expect them to follow in the workplace. Without a manual, misunderstandings, internal problems and lawsuits can develop. What you can do: Have an HR professional help you create a handbook for your company.
- Not obtaining patents, copyrights or trademarks. Every company has intellectual property, such as brand names, designs and inventions, that they need to protect. Otherwise, another company might take your intellectual property and use it in their business. What you can do: Talk to an attorney to determine what you need to do to legally protect your intellectual property.
- Not submitting your payroll taxes to the government. Uncle Sam expects businesses to collect and remit their payroll taxes. When you submit your company’s payroll taxes late or not at all to government agencies, you can incur penalties – or worse, your small business could actually be shut down. What you can do: Hire a payroll provider, like The Payroll Department in Brownsburg, Indiana, to help you submit all of your withholding taxes, like Social Security, Medicare, federal, state and local taxes, automatically. The Payroll Department also will prepare and file all of your required payroll tax forms. Call The Payroll Department today at 317-852-2568 to avoid costly small business taxes mistakes.
It comes down to letting professionals give you advice and guide you in the beginning of your business to keep from sabotaging yourself. Keep that in mind as you are hanging that shingle so it will be there for a long time.
– Ariane of The Payroll Department Blog Team