A single legal oversight can kill a business, whether you’re a local café, restaurant, flower shop owner or new tech start-up. We’ve compiled several legal problems that can be easily avoided by consulting a legal expert at LEGID.
1. Handshake agreements
The good old days of the “handshake deal” seem wonderful, but times have changed a lot. Electronic business transactions have changed much of the way people do business. Entrepreneurs may write their ideas on a piece of paper or discuss verbally and simply shake hands with a new partner, but when plans fail, who owns the business idea? Avoid handshake agreements and put things into a sound, legal agreement.
2. Contracts with unfair terms
Whether it is lenders, suppliers, customers or employees, every business owner has contracts that govern relationships between entities or individuals. It is always best to have a contract in place that dictates the terms of any relationship. In addition, legal terms may mean one thing in a contract and yet another in everyday English. A business owner should always have a lawyer review any contracts he enters into so they fully understand the terms.
3. Insufficient Insurance An insurance claim is almost always the result of an unforeseeable event. Businesses sometimes do not have adequate, or any insurance at all, which is a very dangerous practice. Businesses must ensure their insurance policies don’t have loopholes that prevent them from covering damages in case the unexpected occurs.
4. Wage payment mistakes
Taking illegal deductions from wages for uniforms, customer walkouts and shortages in cash drawers are all very common. Mishandling tips and tip credit as well as not compensating overtime appropriately are also problems. Small business owners may not have the time to stay on top of changes in wage laws, as they focus on running their company.
5. Bad Financial Information Protection
Both inside and outside the business, business owners should guard their financial information cautiously (to guard against employees who might steal it for competitors or share it with customers). It is very easy for an angry employee to misuse your financial information. Protecting a business’s financial information requires preparation and action plans.
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