SEVEN LEGAL ISSUES SMALL BUSINESSES FACE
Once you start running a business, the world gets a lot more complicated. You’ll find yourself faced with a plethora of issues and decisions that most people never have to consider, and legal inconveniences may be an unfortunate side effect. Here are seven such issues, along with considerations for dealing with them.
Licensing is one of the most common legal issues small businesses encounter. Make sure you’re in accordance with your local government’s requirements for business licensing. Otherwise, you will likely find yourself facing fees that could easily have been avoided. The cost of the license may vary depending on where you operate, but the need to have one remains constant throughout the country.
- Employee Termination
It happens to many businesses. You hire someone you believe to be more qualified than they really are, and soon realise you’ll be losing money by keeping them around. Or you find out that they just don’t fit in with the rest of your employees and are affecting productivity and morale for the entire team. You can lessen your chances of legal repercussions if you take the right precautions before terminating anyone.
This starts with spelling out the terms of employment in an employee manual and documenting any disciplinary actions involving the employee. If there’s any doubt about what you should do, it would be worth your while to consult your attorney.
- Misclassification of Employees and Contractors
Make sure you classify employees correctly as far as the government is concerned. “The misclassification of employees as independent contractors presents one of the most serious problems facing SME employment decisions.
- Property Matters
LEASING: If you are moving into new premises, you’ll be required to negotiate and sign a commercial lease. Commercial leases create binding legal obligations between you and the landlord that may last for many years. As a tenant, it is important that you have an expert advisor review your commercial lease to ensure you understand exactly what you’re committing to.
OWNING: In general, commercial real-estate is considered a safe investment without the hassles of dealing with a Landlord. Still there are many issues to consider on how to buy and hold the asset.
Purchasing through a self-managed super fund (SMSF)
Depending on your circumstances, you may be able to buy commercial property through your SMSF and lease it back to your business at an arm’s length.
This can be an excellent way to build your wealth and is gaining popularity among small business owners due to its tax-effective structure and the protection it offers from creditors.
- Shareholders’ Agreement
If your business has more than one shareholder, an agreement is strongly encouraged. One day, the business may split up or be sold, and if no agreement exists, legal battles can — and likely will — ensue. Even if current shareholders are on the best of terms, things can always turn sour, and it’s not a good idea to leave any gray area when it comes to who gets what. The agreement should be drafted, or at the very least, overseen by a lawyer with experience in such matters.
- Creditors and Debtors
Are you experiencing difficulty recovering the debt? Our expertise and commitment, assisting both small and medium companies to recover monies owed to them.
SFR Legal Services Include:
- Drafting a formal Letter of demand
- Preparing a Statement of Claim
- Performing debt recovery litigation
- Entering judgement
- Enforcing judgements
What should I do if my business runs into financial difficulties?
One of the first things to do is to seek expert advice. SFR Legal cangive advice on whether or not your business can get back on its feet. Limited company directors who allow their company to continue doing business despite insolvency being inevitable can be held liable for wrongful trading.
Protection of Personal Assets from Creditors- SFR Legal is well placed to advice on strategic actions that all SME’s should look to incorporating into their business regardless of their current financial position.
- Litigation (Avoid)
This is one issue that you can control yourself. Don’t rush into a lawsuit, because doing so means paying legal fees, and as you can probably guess, these can add up quickly. If you can find a way to negotiate and settle a dispute outside of court, it might be wise to consider that option.
Consult SFR Legal if you have questions or concerns about any legal issue. Doing so will likely cost you less than the fees that come along with legal battles.
Of course if legal action is required we will strongly support your position.