by Mary Fritsch-Derrick | Nov 25, 2017 | Legal and Risk Management
As small business owners or managers, we wear many hats. Is “lawyer” one of your hats? If so, you may be putting your business at serious risk. Taking the time to perform a legal checkup helps you identify potential liabilities. Here’s a checklist for starters.
- Are your business contracts up-to-date?
It is important to ensure your contractor, employee, vendor and bank contracts are free of potential risks and enforceable in court. One of the greatest challenges attorneys face is attempting to resolve contract problems. Have your attorney review every new contract before you sign it.
- Is your staff properly classified?
Employee or Independent Contractor? It is your legal responsibility to establish the appropriate IRS classification. Making the wrong determination can have serious financial and legal consequences. Visit the IRS website to learn more about the guidelines for classifying workers and talk with your attorney.
- Is your business compliant with all employment laws, like wage and hour laws?
The Fair Labor Standards Act (FLSA) has established the guidelines to determine whether or not an employee is exempt from wage and hour laws. Payment of overtime, also governed by the FLSA, is a frequent point of contention in labor disputes. The DOL offers valuable information on employee classification via their website. Keep in mind some states’ and localities’ wage and employment laws may exceed FLSA standards. Contact your attorney if you need more information on the laws where your business operates.
- Is your business structure appropriate for YOUR business needs?
When determining your business structure, it’s important to consider tax treatment and benefits, sale of interest in the business and limiting your personal liability. Do you have the best structure for your business?
As a Sole Proprietorship, you risk your home, personal savings and other assets if your business is sued or cannot repay a debt. As a Partnership, you assume greater liability because you are also responsible for certain actions of your partner(s). As an LLC or Corporation, you are protected from certain liabilities, but specific tax and reporting requirements exist. Talk to your attorney and accountant to determine the best fit for your business.
- Is your business insurance adequate?
General liability, professional liability, product liability, commercial property and home-based business insurance are some small business insurance options. Make sure you have the right coverage by carefully examining your potential liabilities. Your attorney can help review a policy before you sign to make sure you understand the fine print.
- Is your intellectual property protected?
Copyright laws protect intellectual property including written text, photographs, paintings and designs. Establish a copyright when work is completed.
Trademarks protect the design, name, words and phrases used to identify your business and products. Patent law exists to protect innovations or inventions from reproduction without permission or compensation.
Both trademarks and patents require registration with the United States Patent and Trademark Office. Visit the USPTO website or call your attorney for more information.
For more information on gaining access to experienced, affordable legal services, contact Your B2B Team today. The Team will help you limit business legal risk and plan for future challenges.
Adapted from Small Business News Alert: It’s Time for Your Small Business Legal Checkup (LegalShield Newsletter, July 2016). Click here for full article: Small Business Legal Checkup