Top 5 Most Common Legal Problems For Small Businesses

Aside from the quite frankly ludicrous and peculiar legal problems that only occur once in a blue moon, there are very common mishaps that can strike at any time – and they do. Here are my top five most common legal pitfalls for the small business:

1. Employment issues

legal problems of small businesses

Lots of SMEs take on new staff but without bothering with formal procedures like drafting robust contracts. This can create needless uncertainties around pay, benefits, term and duties. Both foolish and foolhardy, this also makes unclear the responsibilities concerning legal obligations around pensions, data, and grievance procedures, as well as rendering the issue of dismissal rights rather murky. In short, it’s a recipe for disaster.

2. Partnership issues

legal problems of small businesses

A number of small businesses are founded by friends and family, or colleagues from another business setting. In scenarios such as these, where people already know each other well, it is tempting to not bother validating the small print of partnership agreements. But regardless of the nature of your business, failure to set these things out clearly at the start can cause lots of heartache down the line. You must make crystal clear who controls what, and everyone’s responsibilities, rewards and exit rights.

3. Intellectual property disputes

legal problems of small businesses

SMEs undervalue protecting intellectual property, seeing it as too expensive, a waste of their time, and too difficult to enforce. This is an illusion. Copyright (for example, in software) does not need to be registered at all – merely produced in physical form – written down) and asserted with proper use of a “c” notice. Likewise, a UK or European trademark is not expensive to register. Patents are certainly more complicated and more expensive, but even an application for a patent can give investors reassurance and at least deter potential infringers.

4. Funding problems

legal problems of small businesses

Once again, a cavalier attitude to formalities is a no-no, especially if your company’s investors are family or friends, or the investment deal disproportionately favors professionals (angel investors or banks, for example.) Arguments and a loss of control of your business can ensue, the business could be massively diluted, and provisions made could make future investment much harder.

5. Contracts that go wrong

legal problems of small businesses

At last you have a client or a customer – a cause for celebration if ever there was one! Think a handshake will do, or an email exchange to form the agreement? Often this is not enough. A simple email will miss out detail on payment calculations, payment dates, allowable deductions, obligations to sort out things that go wrong, as well as termination rights. Legislating for these hazards in advance is far more prudent than when you are in the middle of an argument and not thinking clearly.

As the old adage goes – fail to prepare, and prepare to fail. While it’s easy to get caught up in the heady buzz of starting a new business venture, spotting the flaws in your plan early on is crucial. Particularly if a date with a mother in law is at stake.

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About the Author

Imaeruaka Joseph .N

Imaeruaka Joseph .N

I believe in sharing wisdom with others. Utilizing life to its maximum and blogging is a call for me . Who is Imaeruaka Joseph? Imaeruaka Joseph also known as Inbuilt-Wisdom JIN, is an indigen of Amesi town, in Aguata local government area, Anambra state. Skills? 1. Copy writer (specialty; sales copy) Currently works with Sky blazer ventures, Niger standard industry ltd, Azodo fish farm. 2. Content creator (short stories, articles, memes and poems) Currently works with Andora Novella, Tis foundation and Medium. 3. Author at Amazon (kindle direct publish) Imaeruaka Joseph up to date has six books published on Amazon. -Marriage forum -Wisdom from its inbuilt -The Compile -Did i have sex? - a memoir -Maintenance of some basic electrical components -The poem stream. Reach out to me via email, [email protected]

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