How to Avoid the Most Common Legal Mistakes When Starting Your Small Business

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How to Avoid the Most Common Legal Mistakes When Starting Your Small Business

Starting a small business involves a little creativity, a lot of math, and even more legal knowledge. The great thing about starting a business with a strong legal foundation is that it’s easier to maintain. You won’t run into problems or obstacles at the last minute, or worse, find yourself in legal trouble. Before you let the trusty ship of your brand new business set sail, make sure you’ve thoroughly and comprehensively addressed all the legal needs and requirements necessary for success.

Make Sure You Have Permits and Licenses

Nearly everything you do within your business involves some type of license. Outside of a standard business license, you might require a license for the software that everyone is using. You might need a license for the font you used in your logo, and not having one can create legal problems for you in the event that the creator of the font wants proper compensation. Selling certain products in-store or online may require special permits. Check with a lawyer before you launch anything – even if you wait until the last minute before you launch to get the licenses and permits you need, it certainly beats finding out about them a little too late.

Understand the Difference Between Employees and Contractors

Payroll taxes are very complicated to navigate. Many small businesses simply do not have the time or resources to keep up with large amounts of employees. That’s why independent contractors are so appealing. Before you decide to hire independent contractors, make sure they’re actually independent contractors. The law has some stipulations about what can and cannot be considered contract work – especially if you have control over most aspects of how the work is performed.

Compliance With Workplace Standards

Putting up worker’s rights and safety posters is more than just a formality. The law requires that certain information be posted in a location easily accessible to your employees at all times. Even if they already know pertinent information or have been given copies of pamphlets and signs, you still need to keep some things posted. What you need to post depends on the nature of your business. A construction company and a food service business may have different requirements for the information you’ll need to display. Research industry-specific safety standards and assure your compliance.

Forgetting to Protect Intellectual Property and Proprietary Ideas

Your business was likely founded on some unique concepts. You spotted a need for something in the world and strived to fulfill that need for your potential customers. What happens if someone else starts doing the exact same thing you’re doing? If you haven’t patented or copyrighted the unique aspects of your business, someone else can come along and sweep them out from under you. Protect your name, your logo, and any slogans you use to market your small business. If you’ve invented or revolutionized something, whether it be a product or a process, file to have it registered as yours. If you can prove your ideas or intellectual property were stolen, you’ll have a sense of recourse against shady businesspeople.

No Terms and Conditions or Privacy Policy Online

Many people gravitate towards starting web-based businesses because they’re much simpler. They require less space, less staff, and less capital for overhead. Since the internet became inundated with businesses, new standards of protection have been put into place. Terms and Conditions, Terms of Use, and privacy policies are all necessary for a business to function online. People need to understand what they’re agreeing to buy, what they can do with it once they have it, and how to return it if they don’t want it. They also need to know who is collecting what information from them and how that information is going to be used. Any misrepresentations of your policies might get you into trouble with your customers.

Once you think you’re done checking your small business for legal compliance, check again. Things change all the time, and failing to stay abreast can lead to some serious consequences. It may be worthwhile to keep a lawyer on retainer – you’ll be able to stay ahead of the game.

The same could be said when it comes to maintaining your books. Having a dedicated bookkeeping team can help ensure your business stays ahead of any financial troubles. At Enkel, we help small and medium-sized business owners streamline their bookkeeping process, while they focus on growing their business. Whether your company is located in Vancouver, Edmonton, Calgary, or Toronto, we've got your bookkeeping needs covered! Contact us today to learn more.

Omar Visram
About Omar Visram
Omar Visram is the Co-founder and Head of Growth at Enkel Backoffice Solutions Inc. Headquartered in Vancouver, Enkel provides bookkeeping, payroll, accounts payable and accounts receivable services to over 300 organizations Canada-wide.