As a new business owner, setting aside part of your already stretched budget to pay for legal services may not seem like a priority. However, when you find out about the many legal disputes that are all too common for small and medium businesses that are just starting off, you may change your mind.
From choosing the wrong corporate structure to disagreements between shareholders and even issues with your employees, discover the five most common legal disputes new business owners face and how you can avoid them.
1. Choosing the wrong business structure
When you start off on your exciting journey as an entrepreneur, you will understandably be predominantly focused on launching your amazing new product or service. However, you must not forget the importance of choosing the right corporate structure for your new business.
Do you want to be a sole proprietor? A partnership? Or perhaps a limited liability company? This may not seem like that big of a deal when you are caught up with marketing your new company, but a failure to choose the right option can be catastrophic. If you want to avoid legal complications in the future, then you absolutely have to choose the correct structure
2. Legal problems with employees
As a new business owner, you may be keen to think of your relatively small workforce as a family, and this can have its benefits. However, it can also lead to massive legal liability issues if you do not set out your employees’ rights and responsibilities from the start and clearly promote your preferred code of conduct at work that everyone must follow.
If you do encounter legal problems with your staff, you should immediately enlist the services of a trusted law firm such as https://www.rcklawfirm.com/, who can help you with civil litigation.
3. Disputes between shareholders
Although you may have all shared the same vision at the beginning, it is not uncommon for partners or shareholders to begin drifting off into different directions as your company starts to grow and become successful.
This is why it is so crucial that you have a solid shareholders agreement in place so that you establish the rights and responsibilities of each shareholder to avoid confusion and possible conflict in the future.
4. Discrimination or harassment cases
As a new business, the legal consequences of alleged discrimination can be devastating, with the potential to even put you out of business altogether. If you do not have a HR or a legal department, then you will need to make sure that you handle the hiring of new employees completely to the book, keeping precise records that prove you picked the strongest candidate regardless of gender, ethnicity, or age.
It can also be a good idea to hold regular meetings to ensure that co-worker relations are healthy and that there are no issues that you should be aware of.
5. Disgruntled customers
However hard you try to please your customers, occasionally, you will encounter ones who are dissatisfied with the quality of your product or the level of service that they have received from you. Normally, this can be rectified with a gesture of goodwill and a sincere apology, but in rare instances, you may find yourself on the wrong end of a civil lawsuit.
To avoid this from happening to your new business, be prepared to put in the effort with customer service and utilize technology to your advantage in order to respond to any queries as quickly and as effectively as possible.