There’s no way around the fact that going into business is risky, but identifying and having a plan to deal with the “unknown unknowns” can minimize potential damage whether it be to your business’s finances or good name. Knowing the types of problems to watch out for is the first step in making sure your business is ready to handle whatever comes up.
Here are some of the most common legal risks facing businesses:
The first decision you make—how to set up your business as an actual business—is all-too-often not a decision people actually make. Instead, they start working and then come up with a business structure later, almost as an afterthought. But the structure can make a big difference in the types of legal risks your enterprise may face in the future. Deciding whether to form a limited liability company or corporation or operate as a sole proprietorship affects taxes, potential liability, day-to-day decision-making and much more.
In addition to the possibility of inauspicious terms or the other party’s failing to follow through, which can both cause extensive damage to your business, a faulty contract process from creation through execution—including delays—can open up a company to various risks.
Taxes and Other Regulations
Starting out, you’ll need to make sure your business is in full compliance with all applicable state and federal tax laws, as well as regulations that apply in your industry. But compliance isn’t a “one and done” process, because these regulations will inevitably change. Failure to stay current can mean financial penalties steep enough to put you out of business.
The potential for lawsuits arises just about everywhere in business from employee issues—such as complaints concerning hours/benefits or sexual harassment—to product liability actions. Preparing for these possibilities ahead of time by ensuring compliance and accurate recordkeeping can go a long way in avoiding devastating damages.
A business’s assets are critical to its success, so it’s crucial that both tangible assets, such as real estate, and intangible assets, including intellectual property, are well protected.
Is your business ready to handle all the legal risks it faces? Let’s talk about it. Send us a message or call us at (314) 454-9100 today.
Scott’s practice is dedicated to assisting entrepreneurs, investors, emerging and established businesses with the unique and often challenging issues they meet throughout the formation and growth process: from entity formation, to the management of founder relationships and economics, to the protection of intellectual property, to the financing of growth and navigating securities law compliance. He assists clients as they continue to grow and develop, whether this involves merger and acquisition activities, international licensing and distribution arrangements or counseling of directors and officers.