Published July 28, 2009

Small Business Success: Mitigating Legal Issues

Owning and operating a small business is no small feat. It also comes saddled with a variety of legal issues that are worthy of a great deal of attention. Legal business issues apply to ventures of all sizes. Small, medium or large, legal protection is just as important as good accounting practices.

Startup Legal Business Issues

The importance of legal issues in business begins right at the start of the business venture. Laying the groundwork for a small business consists of the following:

  • The Business Name: Quite possibly the first legal issue one crosses in business is developing the actual name of the company. Obviously, you cannot legally use a business name that has already been chosen by another company. Local state agencies have detailed search systems that will allow you to research what names are already in use and if the ones you are considering are available. Typically, the Secretary of State will have information available on business names and legal protection for the business name that you choose.
  • Business Structure: There is more than one way to structure your small business, and each one provides legal protection in a variety of different capacities. Some of the options include sole proprietorship, partnership, corporation, s-corporation, or a limited liability company. The legal issues in business change with each of these different structures, and it is important to do comparative research before selecting the best option.
  • Business Licenses: Depending on the nature of your business, there may be a variety of licenses or permits that are required by the state or federal government. At the absolute minimum, you need to secure a business license and tax registration. These will help you to avoid certain legal business issues. Research the type of business you are starting to see if there are any other special licenses required.

Ongoing Legal Business Issues

After the doors are open and the operations are running smoothly, legal issues in business don't disappear. The following factors influence legal business issues on a regular basis:

  • Non-Disclosure Agreements: If you are providing all or even part of the financing for your business, or if you sign contracts with suppliers and vendors, non-disclosure agreements will provide the degree of legal protection that you seek. Whenever an outside firm has access to pertinent information about your business, you must develop an agreement to ensure confidentiality.
  • Employee Labor Law: There are a myriad of legal business issues pertaining to employees and labor. For example, discriminatory hiring practices of any kind are not permitted, and you also must be very careful when you fire employees. There are also restrictions regarding age and work permits for non-citizens of the United States.

    The Occupational Safety & Health Administration (OHSA) also provides a host of requirements regarding workplace safety. Complying with OSHA standards is part of protecting your employees and one of the foremost legal issues in business. You will need to actively comply with standards and devise strategies for adapting to any changes on a regular basis.

There are more startup and ongoing legal business issues when it comes to small business, but these basics will get you started on the right foot. Whenever possible, it is best to consult with an attorney before making any decision or changes that may impact legal protection issues.