Small businesses can face legal troubles if not prepared
November 19, 2012
When first starting out, creating a small business can seem like a fun task. Owners get to show their creative side - they pick out decor for the storefront, choose what products they're going to be developing and often take a hands-on approach to marketing, finding unique ways to reach new customers.
However, there are many codes, ordinances and laws that leaders have to be aware of during all aspects of running a business. For instance, they have to keep their building up to code, abide by safety regulations and make sure their merchandise is properly labeled and safe. This can be made all the more difficult by the fact that entrepreneurs tend to go it alone and are new to their industry. However, if they are aware of the issues that often plague newcomers, they can guard against it beforehand.
Handle equity issues as they come
Often, for financial and experience reasons, someone with the idea to start a small business takes on a partner. Now, they will have someone else to delegate tasks to in the event of a crisis, to consult with when important choices arise and to provide additional insight and opinions.
However, this relationship could turn sour, so Entrepreneur Magazine said leaders have to account for this early on in the life cycle of the business. The source suggested drafting an agreement that dictates what will happen to the company if one party leaves - will they take half, be bought out or forced to go with another option? This is one of the largest oversights of a firm, the magazine explained, so it should be sorted out before the relationship could become questionable.
Remain compliant in finances
Maybe the owner or individual who handles the company's money has a certain way of recording the financial data using a method they are comfortable with. However, the firm's administrators have to make sure that the fiscal policies always remain compliant with the law, or else they are likely to face massive legal, auditing and costly problems.
One of the most important things workers can so is to keep track of auditing records and reviews, the Houston Chronicle reported. These documents should be held onto for at least five years, the newspaper said, because investigators want to look at the files. Moreover, they should always be truthful and organized.
An easy way to do ensure financial compliance is to invest in accounting software. Not only is using the technology often easy and accessible via multiple devices, which helps with real time updates, but it provides a clear record of transactions, which can be crucial to prove agreement with laws.