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Updated almost 9 years ago, 12/17/2015
THE FIVE UNEXPECTED LEGAL ISSUES THAT COULD SINK YOUR BUSINESS
Admittedly, the challenges facing entrepreneurs are daunting. As reported in the Arizona Republic, nearly 2 in 5 business owners have come close to failing. In fact, 13 percent said that they had previously owned a business that had failed. Additionally, nearly 2/3 of them report that “being a small business owner or entrepreneur takes more work than they expected.”
Despite these enormous challenges, the vast majority of them (96 percent) reported that they were glad that they had become an entrepreneur.
Given their risk-taking nature and fast-paced work style, entrepreneurs can struggle with legal issues that result from poor planning. In his law practice, attorney Michael E. Fiffik, from Welch, Gold, Siegel & Fiffik, P.C. in Pittsburgh, a LegalShield provider law firm, sees five major legal issues that consistently face his entrepreneurial clients.
TOP 5 UNEXPECTED LEGAL ISSUES
1. UNFAIR CONTRACTS
“Every business owner has relationships governed by contracts, from lenders to suppliers to customers to employees. Business owners should always try to dictate the relationship’s terms by using their own contract. One example is purchasing materials or supplies; entrepreneurs should avoid using a vendor’s order form and create their own purchase orders with terms that are more favorable to them.
The vendor may be anxious for the sale and agree to use your form instead of theirs. In the event of a dispute, your terms will offer you important protections. Which is exactly why, if you must use someone else’s contract, reading it is an absolute must. Vendors will often include very unfavorable terms in their agreements such as high interest rates on unpaid balances, personal guarantees, specifying that dispute will be governed by the law of a different state, etc. Any one of these can cripple a small business.”
2. INADEQUATE PROTECTIONS FOR FINANCIAL INFORMATION
“Business owners should guard their financial information very carefully, both inside their business (from employees who can use the information on behalf of a competitor or to share sensitive data with customers) and outside (for example, from people who might obtain a judgment against the business and then place a freeze on accounts that they are aware of).Consider using a bill-paying account that is funded with only enough money to pay the bills. Keep your cash reserves in a completely different bank.”
3. MISTAKES IN WAGE PAYMENTS
“These are very common, and include problems such as making illegal deductions from employees' pay for cash drawer shortages, uniforms and customer walkouts. Other issues include not compensating appropriately for overtime and mishandling tips and the tip credit.
These errors almost always arise from a lack of understanding of the applicable wage laws, which can hit employers with back pay, interest, penalties and attorneys’ fees for claims filed by current or former employees. In addition, owners can be held personally responsible for unpaid wages.”
4. HANDSHAKE DEALS
“My grandfather was a banker at a community bank in Mason town, PA and used to make loans on handshakes. Handshakes are important – psychologists have studied it! You can really size up a person from the way they shake hands. The nostalgia of the “handshake deal” is wonderful but the times have really changed. In today’s electronic B2B world, many business people never meet one another. In a world where first impressions are becoming harder to come by, my advice is ‘get it in writing.’ If you’re willing to say it, then put it on paper. If they will not, it may be one of those deals better avoided.”
5. INADEQUATE INSURANCE
“Events that lead to insurance claims are, by their very nature, unexpected. Some business owners want to risk ‘doubling down’ on the risk by not having adequate – or sometimes any – insurance. In some instances the law requires insurance – workers compensation, builders risk insurance being two common types. Not having adequate insurance for a property investor can be a disaster that is one freak accident away.
One of my clients had a rental property that caught fire due to a tenant’s over-heated laptop left on a carpeted floor. He found out the hard way that his insurance wasn’t up to par, costing him thousands of dollars in lost revenue because he is unable to afford to repair the property. Another client let his workers compensation insurance lapse before one of his employees was clipped by a driver and seriously injured. Thousands of dollars and fines were incurred as a result of medical bills, lost wages and government investigation. It pays to find a good insurance broker, take the time to explain the nature of your business to them and be engaged in the process of shopping for insurance that will cover the likely risks associated with your business.”
The content of this article is intended for general information purposes only, and is not legal advice. Readers should be aware that while certain principles outlined on this site may be similar to principles followed in their own state or province, laws can vary considerably. © Copyright 2015 Pre-Paid Legal Services, Inc. d/b/a LegalShield℠ One Pre-Paid Way, Ada, Oklahoma 74820
You should post this in the blog... good post
I actually think the percentage of businesses that fail is higher than 2/5 (40%). I think the actual statistics is more like 90% of businesses don't make it past 5 years and those that do 90% won't make it to year 10.
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@Hermie Gonzalez this is more of an advertisement than a post.
and its OLD NEWS we all know this.. nothing new here
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Originally posted by @Matt Motil:
You should post this in the blog... good post
I actually think the percentage of businesses that fail is higher than 2/5 (40%). I think the actual statistics is more like 90% of businesses don't make it past 5 years and those that do 90% won't make it to year 10.
That may be true! It may be higher. There is no clear-cut success formula for succeeding in business. If there was one, we would never hear stories of business failure.
However, we must persevere through setbacks. If we let little roadblocks deter us, we will never make it in life. Thanks @Matt Motil.
Failure rate for businesses is much higher than 2 in 5. It's closer to 70% of businesses that don't make it 5 years.*
And none of the five issues listed are a significant factor in that business failure rate.
Generally, lawyers are good for law. They're typically not a great source of business advice. And if you worry about every little thing a lawyer tells you you need to be worrying about in the first few years, you'll never grow your business enough to survive past that 5 year point.
*(You get varying figures depending on who's measuring and what you call a "business" - not every Advocare rep who has to file self-employement taxes is a real business.)
"The content of this article is intended for general information purposes only, and is not legal advice. Readers should be aware that while certain principles outlined on this site may be similar to principles followed in their own state or province, laws can vary considerably. © Copyright 2015 Pre-Paid Legal Services, Inc. d/b/a LegalShield℠ One Pre-Paid Way, Ada, Oklahoma 74820"
Seriously? A post discussing legal risks while also containing a disclaimer that clearly tells the reader that this is an advertisement.
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Well I must admit, when I need business statistics, there's no more authoritative source I turn to than the "Arizona Republic." Have you actually ever run a business, @Hermie Gonzalez? Is there a reason you didn't disclose that you are an independent associate at LegalShield, as shown here and here?
How transparent, and not even a convincing advertisement. Is this the kind of hard-hitting, sage advice one can expect from LegalShield?
Originally posted by @Jeff S.:
Well I must admit, when I need business statistics, there's no more authoritative source I turn to than the "Arizona Republic." Have you actually ever run a business, @Hermie Gonzalez? Is there a reason you didn't disclose that you are an independent associate at LegalShield, as shown here and here?
How transparent, and not even a convincing advertisement. Is this the kind of hard-hitting, sage advice one can expect from LegalShield?
Yes, I run a very successful business before and now am in other businesses. I thought this site was a site where business professional interact and share ideas.I just shared a Legalshield blog, no intention of advertising it. I am proud to be an independent associate of Legalshield. Our service has been helping a lot of people. Legalshield is a business too! We make a living while making a difference.
Originally posted by @Michael Hayworth:
Generally, lawyers are good for law. They're typically not a great source of business advice. And if you worry about every little thing a lawyer tells you you need to be worrying about in the first few years, you'll never grow your business enough to survive past that 5 year point.
*(You get varying figures depending on who's measuring and what you call a "business" - not every Advocare rep who has to file self-employement taxes is a real business.)
There are lawyers out there that are familiar with business development. Especially the lean and mean solo practitioners who have to fight for their market share. However, that isn't the reason one should go to a lawyer. Part of being a good businessman is knowing all the risks associated with a given action. Sure, it is one thing to say "don't worry about all the things a lawyer tells you", but it is another to avoid them all together and rely on blind luck in your business dealings.
@Hermie Gonzalez This should have been posted in the market place, honestly BP has been great for my business and I have met a bunch off wonderful people on here.
Instead of spamming the forums you should try to learn something and/or try to get involved and meet new people, that will have a better impact on your business then spamming the forums trying to promote pre-paid legal. My honest opinion is you get what you pay for and I pay good money for my attorney and my CPA.
Good luck!
Excuse me? Ian Hoover.. What made you think that I was spamming and promoting Legalshield when I posted an article about the the legal Issues a business can have.
I got myself a lot of leads from the networking and relationships that I do in my business.
You don't even know me personally, or how I do my business, so you better stop using words that is not me.
If you check my post, clearly, there was no links in it that sent anybody to my website.
So, how can you say that I am spamming people????
I just shared an article that I know may be helpful to some people. It may not be for everybody. Some may appreciate it and some may not. But, it was in good faith that the article posted.
Next time, you better be careful with words you put here. Instead of saying inappropriate words with what I did. Why don't you just say, "thanks for sharing"..Isn't that better?
And as far as the attorneys we have are concerned, our company does a good job, helping members with the service. Clearly, this is not for you. Totally cool, I don't do injustice to other people in the hope that I will be noticed in the forums. If you don't have a good thing to say, especially to other people, I think you just better not say anything, otherwise it will be used against you!
Good luck!
Originally posted by @Hermie Gonzalez:
Excuse me? Ian Hoover.. What made you think that I was spamming and promoting Legalshield when I posted an article about the the legal Issues a business can have.
I got myself a lot of leads from the networking and relationships that I do in my business.
You don't even know me personally, or how I do my business, so you better stop using words that is not me.
If you check my post, clearly, there was no links in it that sent anybody to my website.
So, how can you say that I am spamming people????
I just shared an article that I know may be helpful to some people. It may not be for everybody. Some may appreciate it and some may not. But, it was in good faith that the article posted.
Next time, you better be careful with words you put here. Instead of saying inappropriate words with what I did. Why don't you just say, "thanks for sharing"..Isn't that better?
And as far as the attorneys we have are concerned, our company does a good job, helping members with the service. Clearly, this is not for you. Totally cool, I don't do injustice to other people in the hope that I will be noticed in the forums. If you don't have a good thing to say, especially to other people, I think you just better not say anything, otherwise it will be used against you!
Good luck!
Thats kind of how I took it, I didn't feel i was being sold anything.....Thanks Hermie
Originally posted by @Sean Kremer:
If you didn't have permission from the copyright holder to cut-and-paste that entire article, then you have committed copyright infringement.
If you did have permission to cut-and-paste the entire article, then it's probably safe to say that you were given permission for the sole purpose of promoting the company.
So, were you committing copyright infringement or were your spamming? I don't see a third option (though technically it could be BOTH of the first two)...
I wasn't trying to start an argument just felt it should be posted in a different section or at the very least without a disclaimer. My apologies. But I have had quite a few people trying to pitch me pre-paid legal so I do think advertisement whenever I see anything with them involved.
@J Scott LOL that is funny
@Ian Hoover Hey Ian! I'm glad to hear from you. Apologies accepted.
My apologies too. I was in fact trying to explain. This is a great
community of real estate investors, and we should all be friends here.
NO NEGATIVITY within the community is a nice thing to have here. We are not here
to show one is better than the other. We are here to share and help each other any
way we can. Good luck to you and your business and more power!
@Sean Kremer You got a very short note, but I found it appreciative. Thanks too and you are most welcome!
@J Scott I am an Independent associate of Legalshield and we are allowed to post articles which gives value to the marketplace. And I am definitely not spamming anybody in any way, shape or form. Thanks for asking and I appreciate your concern.