Five Legal Mistakes New Business Owners Commonly Make (Contribution from John Adams)


The following post comes to us from John Adams, a freelance writer specializing on the topics of business and business law. Learn from John the most common legal mistakes new businesses make.

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Business owners are busy people, who remain focused on the most important things regarding their businesses such as developing their product and services as well as marketing their brand.

While remaining busy in the hassle of strengthening their business, they often forget or don’t give deserved attention to the legal aspect of their business. Sadly, many new business owners don’t realize the importance of this aspect which becomes the devastating factor for their entire business.

Beware! Don’t let this happen to your business. If you are new to the world of entrepreneurship, watch out lest you should make the following common legal mistakes:

  1. Failing to Hire an Attorney:

You may feel that you don’t need to cater to this aspect of your business simply because everything is seemingly going fine and smooth. Moreover, you may also believe since you are a small business owner, you don’t have significant legal obligations. In these beliefs, you are committing a big mistake. You don’t need to wait for the legal issues to arise and then scramble to hire an attorney. Rather, consider a good business lawyer in the beginning of setting up the business.

  1. Not Deciding on a Business Structure:

There are several business structures that you will have to pick for your business such as sole proprietorship, corporation, LLC, S corporation, or partnership. Every business structure has its own features; what’s most important is to do your research so that you can confidently pick the one that suits your business needs the best. For instance, if you go for a sole proprietorship, you should know beforehand that your business will stand as ‘one’ legal system. And that means in case of a lawsuit against your business, your personal assets are at risk. The bottom line is don’t go it alone when making this very important business decision, consult an attorney to consider which legal structure you should go for.

  1. Ignoring Terms & Conditions for Customers:

Unless you clarify the terms and conditions to your customers regarding your services and products, they will also remain unclear regarding the usage of your products. This may lead to the wrong usage of your products, resulting in personal injury to the customers. When you leave this loophole in your business, you are inviting your customers to file a lawsuit against your business. The Terms and Conditions clarify the obligations that users have to observe while using your products.

  1. Not Having a Privacy Policy:

Privacy policy today,is highly essential for any business. This policy clearly states what information of the customers will not be shared. For example, you are legally bound to protect the information of your customers and keep their privacy protected. In case you share their personal information to any other company or customers, they have the right to sue your business and retain the legal right to know about such activities. Make sure your business website has a privacy policy to build customers’ trust in you!

  1. Compiling Incomplete Contracts with Vendors:

A rule of thumb for running a successful business is to have a contract with other businesses you need to deal with, such as vendors.

When you need to purchase raw materials from others, make sure you have entered into a legally binding agreement. Whether you are the business owner or a tenant, this legal document must determine the rules and regulations of doing business. You may have to suffer the losses if any party deviates or breaches the contract which gives the other party a fair reason to file a lawsuit against your business.

If you want to expand and strengthen your business, make sure you have an expert business attorney to guide you through the legal process. This way you are not only protecting your business but also building trust among your employees and customers.

Do you have additional advice to share for new business owners who are navigating the legal aspect of their business? Join in the conversation by leaving a comment below!