7 Common Legal Problems Businesses Face in Their Operation

Many legal issues can cripple businesses in the United States. A trusted business lawyer is one of the best ways to avoid these legal problems.

1. Formation of a business

Every business must start from the best foundation, and that includes the structure of its business. A wrong business structure can have severe tax and legal consequences.

There are many business structures available, including sole proprietorships, partnerships, LLCs and corporations. The sole proprietorship could make the owner of the business vulnerable to personal liability. Although the business structure can be modified later, it should be properly set up from the beginning. Potential business owners can get the best advice from attorneys about the best structure for their type of business.

2. Licensing

Every state has its own business licensing requirements. These licenses are issued to businesses when they first start. If a business wants to stay compliant, it will need to renew many business licenses each year. Failure to pay these licenses could result in penalties or cancellations.

3. Agreements between employees and partners

Wrongful termination claims by employees are a common problem in the United States. Because handshakes and word of mouth are not binding, contracts are crucial when it comes to hiring employees. These same principles also apply to partnerships.

The rights and duties of employees should be stated in their contracts. Employers are required to record disciplinary actions against employees and should include possible reasons for their dismissal.

An attorney should be drafted into any termination agreement if a company wants to fire an employee who is underperforming.

The U.S. government randomly conducts immigration audits. All businesses should check the legal status of all their immigrant workers.

Employers could be caught in unnecessary legal disputes if they have overtime disputes. Employers should ensure they are clear about overtime rules and that all overtime is approved in advance.

In the event that the business is sold, divided up, or has differences in its operations, partner agreements are vital. It must be clear in the partnership agreement what will happen to everything.

4. Discrimination and harassment cases

A business can be hurt by discrimination claims. It's up the owners to show that they have fair hiring processes. In case of future claims, they should retain the resumes of all applicants for each job. Employers must show that they have hired the best qualified person for the job, regardless if the applicant is of a certain age, ethnicity, gender, or other characteristics.

Harassment can take many forms, but it is most commonly sexual, religious, or race-based. They should be avoided in all work environments as they can damage the business' image and result in huge legal fees.

In all business settings, it is important to encourage staff meetings and create a culture that doesn't tolerate these practices.

5. Employees misclassified

According to The Federal Department of Labor, employees must be properly classified. The department claims that many businesses incorrectly classify employees in order to avoid Workers' Compensation.

Businesses can be charged with criminal offenses if employees are not properly classified, even subcontractors.

6. Copyrights, trademarks, and patents

Research must be done carefully to ensure that there are no copyrights or patents in place before any new products can be developed. Companies make a lot of money waiting for someone else to infringe their patents. These legal battles can last for years and are often expensive.

Trademarks also have to do what the trademark relates to a product or business name that is already in use. Research is essential before launching any business or product. Even an honest error can lead to costly consequences.

7. Dissatisfied Customers can file a lawsuit

Businesses can avoid problems with unhappy customers. Businesses can avoid problems with dissatisfied customers by being proactive and addressing issues promptly. Customers support is crucial in avoiding litigation and class action lawsuits. While some issues can be resolved outside of court, many dissatisfied customers will file a class action lawsuit against the company. This could cause irreparable damage to the brand's image.

Avoiding legal problems

These are not the only legal problems businesses face today. Tax issues and disputes with contractors and competitors are also important. With a proactive approach, and sound legal advice, most of these can be avoided.