The list of things a small business owner needs can be very long. Legal issues should be high on that list, though. Making mistakes on important legal decisions or failing to get the right advice can be devastating to a company. Let’s look at four legal needs of small business owners.
Choosing the Correct Business Structure
The most common business structures are sole proprietorships, corporations, partnerships, and limited liability companies. Each type of business entity has its own advantages and disadvantages that small business owners should carefully review. Choosing the wrong business structure makes a difference in:
- How the company will be formed,
- Who will manage the company,
- How taxes will be paid, and
- How much personal liability the owners are taking on.
For example, a couple named Harvey and Julia decide to open a small RV park. Because there are two owners with equal shares in the company, they will not be operating as a sole proprietorship. They are not interested in the formal structure of a corporation and dislike the double taxation. Harvey and Julia decide to form a limited liability company to take advantage of the tax structure and the protection from liability.
Negotiating and Signing Strong Contracts
Many companies rely on contracts to keep their teams afloat. Business owners should resist the urge to write those contracts themselves. A badly written or incomplete contract can be costly.
Two friends, Dave and Mike, run a small coffee shop near the local college. They have signed contracts with suppliers, their landlord, and a small marketing company. However, they care more about the quality of their lattes and the quality of their contracts. Because they failed to read the contracts carefully and have their attorney review them, they fell into some bad business relationships that cost them dearly.
Using Strong Non-Compete and Non-Disclosure Agreements
Even small companies may need protection from competitors and from misuse of confidential proprietary information. Two ways to do this are the non-compete agreement and the non-disclosure agreement
Julian S. was a key employee whose employer required him to sign a non-compete. This agreement may prevent him from leaving to work for a close competitor or from opening a similar business.
A non-disclosure agreement may prevent employees from stealing or misusing confidential information. Potential investors may be asked to sign a non-disclosure to prevent them from using or divulging data learned during investment discussions.
Complying with Government Regulations
It sometimes seems there are as many government regulations as stars in the sky. Complying with those rules and regs is difficult, but necessary.
Ronald M. ran a small print shop in Anniston. In addition to labor and employment laws, licensing and regulation, he also had to follow rules regarding the toxic chemicals he and his workers used every day. Violations of those rules and regulations could lead to big penalties and fines.
Consult with an Alabama Business Attorney.
The attorneys at Miller Estate and Elder Law make it their business to put their client’s needs first. Contact Miller Estate and Elder Law at 256-251-2137 to schedule an appointment or fill out our convenient Contact Form. We help clients in Anniston, Talladega, Birmingham, Gadsden and surrounding communities.