Any business, big or small, new or old, has the potential to make legal mistakes. This is especially true for small businesses, which may not have the resources or knowledge to prevent or fix them.
Matthew Nicosia believes that there are many different types of legal mistakes that can land businesses in hot water, causing them to incur expensive fines or even lose their licenses. These minor faults can easily be avoided with a little knowledge and effort.
Common Legal Mistakes – Explained By Matthew Nicosia
1. Not having a clear business structure
One of the first things you need to do when starting a business is to choose the right business structure. This will determine how your business is taxed, what liabilities you and your employees have, and how much paperwork you need to fill out.
If you’re not sure which structure is right for your business, it’s best to consult with an attorney or accountant. Many small businesses choose to operate as sole proprietorships or partnerships, but there are also LLCs, S-Corps, and C-Corps.
2. Not properly registering your business
According to Matthew Nicosia, once you’ve chosen your business structure, you need to register your business with the state. This usually involves filing paperwork and paying a fee. If you don’t register your business, you could be subject to costly penalties.
3. Not having the proper licenses and permits
Depending on the type of business you’re running, you may need to obtain certain licenses and permits. For example, if you’re selling food or alcohol, you’ll need to get a license from the health department.
If you’re operating a daycare, you’ll need to be licensed by the state. And if you’re running a home-based business, you may need to get a permit from your city or county. Failure to obtain the proper licenses and permits can result in hefty fines.
4. Not having adequate insurance
Another common mistake small businesses make is not carrying enough insurance. This can be a costly mistake if your business is sued or suffers property damage.
There are many different types of insurance policies available, and the right one for your business depends on the type of business you’re running and the risks involved. Be sure to consult with an insurance agent to determine what coverage you need.
5. Hiring employees without proper vetting
If you’re going to be hiring employees, it’s important that you take the time to properly vet them first. This includes doing a background check and making sure they’re legally allowed to work in the United States.
You should also have a written employment agreement that spells out the terms of your employment, such as salary, benefits, and job duties. Failure to properly vet your employees can lead to all sorts of problems down the road.
6. Not having proper contracts in place
If you’re going to be doing business with other companies or individuals, it’s important that you have a contract in place. This contract should spell out the terms of your agreement, such as what each party will be responsible for and what will happen if there’s a breach of contract.
Without a contract, you could find yourself in a legal dispute with no clear resolution. So be sure to have contracts in place before you start any type of business relationship.
7. Ignoring your intellectual property
If you have a logo, website, or product that’s unique to your business, you need to make sure it’s properly protected. This is known as intellectual property, and it can be very valuable to your business.
There are several different types of intellectual property, including trademarks, copyrights, and patents. If you don’t take steps to protect your intellectual property, someone else could steal it and use it for their own business.
Matthew Nicosia points out that the above-mentioned are just a few of the most common legal mistakes small businesses make. By taking the time to familiarize yourself with the law and understand your rights and responsibilities, you can avoid making these costly mistakes.