No matter the size of the business, legal issues will arise for many reasons. A business may face issues because of a misunderstanding within the company, a dispute among partners, or an issue with the business’ clients.
Legal issues will pose a significant hurdle to a smoothly functioning business. So it is essential for all business entities to know about these common legal issues and follow a few best practices to avoid them.
This article will examine 8 common legal problems faced by businesses in the Frisco, TX area. We have also highlighted how to avoid these issues and how to protect your business.
Common Legal Issues That Can Sink a Good Business
There are several legal hurdles a business in Frisco, TX might face. Below are the most common legal issues that can severely impact your business.
As a business owner, you should protect your company from the following issues.
Not Adhering to Zoning Laws and Not Obtaining the Required Licenses
The city of Frisco has strict zoning laws and licensing requirements. Every business needs to comply with these laws and get the appropriate licenses in order to operate.
For example, if you want to open a bar or a restaurant, you need to ensure that the area you are looking to open the establishment in allows food and beverage service businesses. Many zones have limits to the number of restaurants or bars that are permitted or have rules about parking and late-night noise. Not adhering to zoning laws makes your business prone to fines and penalties from the local administration and other authorities.
Moreover, your business should have all licenses in place to operate legally. Going back to our example, if your business is a restaurant or bar, you need to have a liquor license to sell alcoholic beverages. Not obtaining the appropriate licenses will also lead to fines, lawsuits, and even forced closings.
Lacking a Proper Ownership Structure
The ownership structure is one of the most important decisions you must make when starting a business. It will impact nearly everything, such as how you operate and grow the business and how liability is distributed. It will also impact whether or not you’ll be able to sell your business, accept investors, and other significant issues.
Choosing the wrong ownership structure might expose you to unlimited personal liability for the company’s debts and legal problems.
The right ownership structure separates the business assets from your personal assets and prevents you from being responsible for legal troubles such as tax issues or employment disputes. Furthermore, it protects your business from litigations due to ownership issues.
Working Without a Contract
While forming a partnership in Texas requires formal paperwork, there is no requirement for a written agreement. However, having a written contract in place protects your business from some legal issues.
A contract will lay out all the legal relationships between your company and other parties, such as vendors, employees, customers, and other people associated with it.
A Texas business attorney can carefully draft contracts to outline the rules of conduct between you and other parties, including employment contracts, sale agreements, mergers, ownership definitions, etc. For example, let’s say you purchase some items for your business for a certain amount. If there is no contract in place, the vendor can charge a higher price at the last minute. As there are no operating agreements to show the agreed-upon amount, you will have a more difficult time proving it in a court of law.
Contracts will help your business specify its duty and obligations toward other parties. Check out these six elements of a successful contract and make sure your business contracts include them.
Failing to Protect Intellectual Property (Trademarks and Other Information)
Intellectual property may sound like something only a big business should care about, but it pertains to every business with a trademark, patent, or copyright. Intellectual property law is a critical protection component for businesses offering products.
Without intellectual property, competitors can copy your product, which means they could take away part of your market share. If you don’t protect the information about your products through patents and trademarks, then you have no legal recourse.
If someone else steals an idea or product and uses it for their benefit, it would damage your business. Moreover, it will require you to get into a legal battle with the other party and may also affect your business’s image.
Poor or Non-Existent Employee Agreements
Many small businesses and start-ups fail to create proper employment agreements for their workers, which exposes the business to tremendous risk. If you fail to protect your rights as an employer with a comprehensive employment agreement, you risk not acquiring intellectual rights such as employee inventions, software development, and other work related to the business.
Not having an employee agreement also creates a potential for employer-employee disputes, which is the most common legal issue faced by small businesses in Frisco, TX.
Employment contracts clearly specify your role as an employer and help you establish your authority over intellectual property. A contract also prevents your employees from moving to a company in direct competition with you if they leave. Additionally, the employment agreement will outline things like salary, benefits, and stock options available to the employee and might even limit what legal steps they can take against you.
Do you need an experienced attorney to prepare an appropriate employee agreement or handle a contract negotiation? Contact the The Margolis Law Firm and our Texas business attorneys can draft employment agreements that help your business avoid future legal issues.
Ignoring Tax Laws
Almost everything a business does has tax considerations, and if a business does not follow the tax laws, it might face legal hurdles. It’s mandatory for every company to adhere to state and federal tax laws when doing business transactions.
The penalties for not paying or not withholding taxes can be severe, depending on the amount. Usually, small businesses face these tax issues because they don’t have proper professional advice or guidance. A business attorney with a legal specialization in tax law can help your business navigate tax and regulatory compliance.
Not Keeping Proper Corporate Records
Generally, small businesses, especially start-ups in their initial stage, know very little about keeping proper corporate records, including employment, human resources, corporate tax, and more.
If there are no proper records in place, you may face a whole host of issues from personal liability to payroll discrepancies to contract disputes. It can also create problems if you are planning any mergers or acquisitions because anyone interested in getting involved in your business will perform due diligence.
Not Having Proper Terms and Conditions Policies
Businesses are prone to lawsuits from unhappy customers if there are no appropriate terms and conditions policies. When customers agree to policies before making a purchase, they are bound to them, which in turn protects the business from legal troubles.
For example, most businesses have an established return period for a product. The customers agree to this policy when making a purchase. If there are no such policies in place, the business is exposed to litigation from the customers if they refuse to accept a return.
The Margolis Law Firm Provides Business Attorney Services
Do you need to protect your business? The Margolis Law Firm has the transaction law experience necessary to represent you. Whether you need to pursue legal action against another party who is in breach of contract, or you are being sued for a contract breach, the business attorneys at The Margolis Law Firm can help.
Call (972) 294-0200 to schedule a consultation or request an appointment. We look forward to providing you with the legal services you need to settle your contract dispute.