It all sounds like a great idea. You’ve got the perfect product, you know your target market, and you’re ready to start selling. The problem is your business could be in trouble before it even gets off the ground because of legal issues that could come back to haunt you later.
Now facing legal problems doesn’t mean your business will automatically close, but it can set you back by a lot. Depending on the issue, you could lose a lot of credibility and respect in your respective industry.
Here are six legal problems that can interfere with your business and prevent it from growing.
Hiring illegal workers
Sure, if you’re an entrepreneur starting your own business and don’t have the funds or resources to hire someone legally, it could be tempting to hire illegal immigrant workers.
This practice carries great risk to your business as the Department of Labor specifically outlines the fines and punishments you and your business could face if you’re caught using illegal immigrant workers.
Now, you may face a situation where you didn’t know someone was an illegal immigrant, but you would still be at fault for not checking if they had a valid visa, a U.S. birth certificate, or another form of identification that says they can work in the United States.
Ensure you take the right precautions to avoid hiring illegal immigrants for your business.
You don’t have the right permits
Whether you’re in construction, retail, or food service, you need to make sure you have the proper permits for what you’re doing before your business can legally operate.
If your city or state requires permits, like food serving for restaurants, then you’ll need to shell out some money for a permit before you can open up shop. Failure to get a permit can result in hefty fines and suspensions.
Additionally, if you have to shut down at any point because you need to get the right permits, your competition that has everything in order could easily surpass you. This will be bad for your business, and you might be struggling to play catchup.
Legal problems with your product
If there’s one thing that can derail your business, it’s a faulty product. Issues could crop up with the FDA or other regulatory organizations, which can cause your product to be recalled and taken off the market.
These delays and stoppages could cost you sales and damage your company’s reputation. It’d be wise to avoid this issue as best as you can. Ensure your manufacturing products are tested, safe, effective, and legal.
Not protecting your intellectual property
It’s important to claim ownership of an original idea, product, methodology, strategy, etc., that makes your business unique.
Many entrepreneurs are surprised to learn they can own their products’ patents, trademarks, and copyrights. It’s not a complicated process either. Typically you’ll need to fill out a legal form or two and file it with the United States Patent and Trademark Office.
If you’re not careful, someone else could copy you or steal your idea, so do what you can to claim legal ownership of your idea. Make sure you protect your intellectual property by applying for patents, trademarks, and copyrights on all of your products and services as soon as possible.
If you need legal guidance make sure to consult an attorney that’s based in the state that you are applying for a trademark. For example, if your company operates in LA you should hire a Los Angeles trademark attorney.
Poor working conditions
What many entrepreneurs don’t realize is the National Labor Relations Board holds employers accountable for working conditions. If workers are not allowed breaks, you can be fined by the board. Additionally, if your employees face dangerous working conditions, like exposure to toxic chemicals, you could be facing severe fines or penalties. Moreover, they can even file a complaint against you personally.
On the surface, maybe you’re okay with a few complaints and think having a tough workplace isn’t too bad. However, in a worst-case scenario, your business could get shut down due to a dangerous work environment, and you would lose your business.
To avoid these costly issues, make sure you implement good working conditions in your business.
Getting sued is probably one of the most obvious legal problems you could face. There are so many different ways you and your business can get sued, and sometimes it’s for things you wouldn’t expect.
Now you might be thinking it isn’t too bad to get sued, especially if you know you didn’t do anything wrong. However, getting sued can do a lot of damage. If you’re underinsured, your business could suffer financially while you seek settlement or fight in court. You may end up spending money on legal fees that would have been better spent growing your company.
Your best solution is to start an emergency legal fund in case you need to seek legal advice or hire an attorney.
There are many legal problems that can derail your business. These problems range from issues with permits, product recalls, poor working conditions, and lawsuits.
The best way to avoid them is by paying attention to what you’re doing, avoid engaging in illegal activity, and seeking legal advice or consultation when you need to.