Top 5 Major Legal Mistakes to Avoid When Running a Small Business

Justin Camper • January 4, 2023

Hey Small Business Owner,


Oftentimes, my business clients are embarrassed by some of the legal mistakes they made when running their small business. After reading this blog, you may be embarrassed by some of the mistakes that you have made when running a business. However, my goal in creating this blog is to give you hope that those mistakes can be avoided and lessons for your future business ideas. So let’s talk about it!

Here are five common legal mistakes to avoid when running a business:


NUMBER 1# Not properly forming or registering your business:


It's important to properly set up your business as a legal entity, such as a sole proprietorship, partnership, corporation, or limited liability company (LLC). This helps to protect your personal assets in case your business is sued. When you create a entity under the law, you have officially created a new person under the law and you didn’t have to get anyone pregnant! The laws sees you and your business as two different people, so if you are operating under your LLC and someone sues you based on a transaction, they can’t sue you as a individual, they would have to sue the  XYZ, LLC! 


NUMBER 2# “Every Legal Relationship Needs a Contract.” Not having a written contract:


A written contract can help to avoid misunderstandings and disputes with customers, vendors, and other business partners. Make sure to include important details such as the scope of work, payment terms, and any warranties or guarantees. I have seen it where business owners are negotiating over $10,000 in a particular transaction, but there is no written agreement. Yikes! Make sure you have a written agreement for every business transaction within your business or you set yourself up for failure! 


NUMBER 3# Not protecting your intellectual property:


If you have developed a unique product, process, or brand, it's important to take steps to protect your intellectual property. This can include obtaining trademarks, copyrights, and patents as appropriate. You can actually protect your cool, unique, and creative business ideas as long as you write them down and get it registered! This is why its’ highly important to talk with an intellectual property lawyer to help you protect all of the ideas associated with your business.


NUMBER 4# Not complying with employment laws:


As an employer, it's important to comply with federal and state employment laws, including those related to hiring, firing, wages, and benefits. Failure to do so can result in costly legal challenges and damage to your reputation. Oftentimes, this is why many small business owners hire people as an independent contractor vs an employer. This is why it is so important to have certain language in your jurisdiction within your contract to protect yourself from liability as an employer. 


NUMBER 5 #Not keeping accurate financial records:


Accurate financial records are important for tax purposes and can also help you make informed business decisions. Make sure to keep detailed records of your income, expenses, and other financial transactions. I am not a number’s person and math was my hardest subject in school. So, that’s why I hire people to help me organize and analyze my financial records. I know it may seem like a daunting task in the beginning, but if you start today organizing your financial records, it can help your business grow in a massive way! 


It's also a good idea to seek legal advice from an attorney who is familiar with the laws and regulations that apply to your business. This can help you avoid legal mistakes and ensure that your business is in compliance with all relevant laws. By avoiding these common legal mistakes, you can help to protect your business and minimize legal challenges down the road.


If you are an Indiana business, do not hesitate to call Justin Camper Law, LLC, I would love to chat with you for free to help your business avoid the mistakes listed in this blog! We take care of the legal side so you can keep your business dreams alive! Stay Legal!

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