Legal issues crucial when forming small business

Entrepreneurs are busy people. They’ve got a ton of things on their mind from marketing and advertising to customer service and phones forever ringing to business appointments – and more. Unfortunately, legal and technical issues have to be attended to at the same time.

According to Entrepreneur magazine, small businesses need to take some basic steps as they grow.

1. Set up the proper business structure. There are sole proprietorship’s, LLCs, S corporations, C corps, and partnerships. Choosing the correct one means learning the advantages and disadvantages of each. For example, as a sole proprietor, the business owner and the business are considered as one in the legal system. If your company is sued, all your personal assets are at risk. Corporate structures and LLCs offer protection of personal assets, although this protection isn’t a guarantee. Talk to a lawyer and accountant about the structure you need.
2. Set up and follow customer service policies. When you access company websites, especially those that provide services of some sort, you’ll usually see a Terms and Conditions agreement. Included in this agreement are all the specifics for the use of your products or services and the customer’s obligations in that use. If you do not have this policy in writing and a box for a customer to check before a purchase, you are wide open to inclusion in a lawsuit should that customer become a defendant.
3. Set up accounting and tax systems. Is your business subject to sales/VAT taxes? When must you file your business income tax returns? Do you need to make quarterly payments? Business tax laws are complex. You need a good business accountant–or at the very least, proven accounting software–to keep accurate records and file your taxes on time.
4. Obtain appropriate and complete contracts with outside vendors. When you use the services of, or purchase raw materials from someone outside of your business, demand iron-clad contracts. Never agree to anything with a contractor without a legally-binding agreement with the terms and language set out clearly and properly.
5. Get the proper documentation on employees. At minimum, before hiring, document and verify past employment. After hiring, document work hours, complaints, responsibilities and attendance issues such as sick days, personal days off, and vacation.

Be sure to specify, in writing, work expectations – including whether work can be done remotely.