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3 Important Legal Tips For Small Business Startups

Starting a new business means navigating through uncharted waters, and sometimes those waters can get pretty rough. You can expect to operate on a shoestring and face unexpected expenses during your early days as a business owner. However, those unexpected expenses don't have to include a lawsuit or legal fines. While it can definitely be tricky to avoid certain legal conflicts, knowing what to expect and where the most common mistakes are made can help you avoid a lot of financial trouble and heartache. Take a look at some important legal tips that can help you keep your business startup in smooth waters.

Be Wary of Independent Contractors

Freelance work is becoming more and more attractive to the American labor force, and a lot of businesses opt to take advantage of that. It can seem sensible to cut costs by hiring independent contractors instead of putting employees who will need benefits, sick days, and vacation days on the payroll.

However, employing independent contractors can be legally tricky. You give up behavioral control when you hire freelance workers. Legally, you can't require them to work fixed hours or attend unpaid training. You also give up control of the means and method your contractors use to complete the work you assign them – for example, you can't stop them from subcontracting the work out to someone that you didn't approve. If you begin setting fixed hours or require your contractors to complete the work using the methods you prefer, then they become employees, with all of the benefits that accompany that position. You can face IRS fines and legal fees for misclassifying workers. Tread very carefully before deciding to bulk up your staff with contractors instead of employees.

Make Sure Business Agreements are Legally Valid

Making contacts is an important part of staying in business. The longer you run your business, the more people you'll meet in peripheral businesses, and you'll use those contacts to reach mutually beneficial agreements when necessary. But when you're first starting out, you may not have a lot of business contacts. Instead, your contacts will be your friends, your relatives, your romantic partners, and people that you meet through these relationships.

When dealing with people that you know personally, you may be tempted to come to informal arrangements or "understandings". Resist the temptation, because these can be a recipe for disaster. Put any business deals into valid written contracts. Even if a written contract isn't legally required, it's a good thing to have – it protects both you and the other party. Oral contracts are difficult to prove or enforce, so don't depend on them.

Do Your Trademark Homework

The last thing that you want is to spend a year establishing your business under one name, then wind up having to change it because another company trademarked the name first. You can prevent this from happening by doing a thorough search for any name that you're considering using before you use it. Be sure to look for possible variants of the name as well as for an exact match.

Once you've come up with a name that is clearly not owned by anyone else, you can protect yourself from trademark infringement by trademarking your own name first. Once you do that, it's a simple matter to prove that you have the right to use that name. However, without your own trademark, you will have to prove you were using it first, which can be legally messy and expensive.

Perhaps the best way that you can protect yourself from legal trouble as a startup is to engage the services of a business attorney early on. Having legal counsel to vet your employee arrangements, contracts, and intellectual property will cost you a little money up front, but it can save you much more in legal fees and court costs down the road. You can find an attorney if you pop over to this web-site.