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Avoiding Common Legal Mistakes

Few things can hurt a small business as substantially as legal complications can. Small businesses often crumble in the face of critical legal problems — it is an uphill battle when the small business is ill-equipped. Several legal problems may be inevitable, but there are also many common legal mistakes that small businesses fall into that can be easily avoided with careful planning.

Here are some of the most common problems as well as how to avoid them:

Employment Issues

Employment laws are complicated. Most employers simply assume that they can hire employees without having to learn about the intricacies of employee rights and employer responsibilities. What many small businesses do not understand is that your staff IS your business. If they are unhappy, not only will their service to your clients be subpar, but they can take legal action. This can come in the form of a lawsuit, formal complaint, or a combination of the two. As well, directors of any small business are personally liable for any claims involving employees, even if the company is incorporated.

The best methods to avoid such issues include having an internal, unbiased complaint management system, and consulting with an employment lawyer regarding employment contracts, and the ways to best protect the business and business owners in the case of a lawsuit

Lack of Succession Planning

Most businesses are built in the hopes that they last forever. However, business owners tend to disregard succession planning for their business. What happens after the owner retires? Or if there is an unexpected, abrupt need for new management? In these sorts of scenarios, if there is no clear plan of action, many businesses will be torn apart by all those who have a vested interest in taking over.

Consult with a lawyer and have a plan in writing that outlines who takes over your business once you step down, how things are to be run, and any other details your legal professional deems necessary.

Handling Complex Legal & Tax Issues Without a Professional

Most small business owners are used to being hands-on and handling things themselves. But it's essential to realize when one needs help. When it comes to things like legal contracts or complicated tax matters, it is essential that a professional in that field look things over before your company proceeds. Reviewing contracts, determining taxes owed, and formalizing business structure are just several situations you should leave to professionals so as to avoid legal complications down the road.

Working on a Handshake Deal

All deals MUST be in writing! A handshake deal can be easily misunderstood and misinterpreted, to no one's benefit and everyone's detriment.

It's always best to have a clear, recorded deal rather than operating on verbal commitments. As a general rule, every deal, commitment or agreement should have corresponding paperwork, regardless of how small the deal may seem.

Keeping Sloppy Records

Every business faces complaints, issues or arguments with customers, subcontractors and/or employees. Ideally, these problems never escalate, but in the case they cannot be solved without litigation proceedings, you want to make sure your business is prepared. Keeping sloppy records can and will greatly weaken your arguments during litigation, and it's something that can be avoided with the proper systems and processes in place.

Do your business need litigation support services in Alberta?

At Cerberus Consulting, we can assess your organization, and assist you in protecting your business from legal complications. Contact us today to find out more.

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