The Common Legal Issues That Can Trip Up a Small Business

Some common legal challenges faced by small business owners could be avoided by consulting with an attorney. As a LegalShield member, you have access to attorneys who will help you make informed decisions that may save you time and money. From selecting the right type of business entity, to contract review and worker classification, here’s how you can take full advantage of your membership. If you have any questions, contact your LegalShield provider law firm. Your provider law firm information can be located on your LegalShield mobile app or through the “Ask Erin” feature on

  • Selecting the Wrong Type of Entity – From sole proprietorships to limited liability companies, there are a number of options when forming a business. The type of entity you select impacts tax treatment, sale of interest in the business and your personal liability. For example, sole proprietorships could leave your home, personal savings and other assets at risk in the event your business is sued or cannot repay a debt. A partnership could expose you to liability due to your partners actions. No matter what type of entity you are considering, it is important to seek the advice of an attorney.
  • Incorrectly Classifying Workers – As a business owner it is your legal responsibility to establish whether the IRS classifies someone working on your company’s behalf as an employee or an independent contractor. The primary reason for classifying a worker is to determine the taxes and record keeping for which your business will be responsible. If you control what, when, where and how work is done, the individual you pay is likely considered an employee. If you fail to accurately report an employee you may be held liable for past due employment taxes. If you are unsure or need clarification, call your LegalShield provider law firm and discuss the matter with an attorney.
  • Discovering a Problem with a Contract You Already Signed – Fixing a bad contract after it has been executed is incredibly challenging. Consider the potential loss of productivity, deterioration of a business relationship and lost income that could result from a poorly written or misunderstood contract. It is critical that responsibilities, duration, payments, fees and other items are clearly defined. As a LegalShield small business member you have an attorney available to review your business contracts.
  • Failing to Protect Your Intellectual Property  – What would happen to your business if a competitor began using your company’s name or began selling a product identical to one that you developed? Could your business survive? Copyright laws protect the intellectual property of artists, including written text, photographs, paintings and designs. Registering a trademarks or service mark protects the identity of your business. Patent laws were developed to protect inventors and innovators who may lack the financial resources to produce or distribute their own inventions. Talk to your LegalShield provider to make sure you are doing everything you can to protect your intellectual property.



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