Small Business Law

When a person or group of people decide to start a new business, it is an exciting, but often nerve-wracking time. There are so many issues to decide regarding the running of the business such as equipment, location, advertising, employees, etc. However, many small business owners don't get the legal advice they need in starting and running a business.

One of the first decisions that should be made is the type of business entity to be formed. Generally, if you do nothing, an owner is considered a sole proprietor and a group of owners are a partnership. However, a sole proprietorship or partnership does not address the problem of personal liability. If one of your employees or agents does something negligent while working (such as causing a car accident), they can be sued, and so can you as an individual. This means your personal assets could be at risk.

Two of the most common small business entities that address personal liability are subchapter S corporations and limited liability companies (LLC). If an employee or agent of a sub S corporation or LLC causes injury, the employee or agent can be sued as well as the sub S corp or LLC. However, the owner or owners of a sub S corporation or LLC cannot be sued personally unless they themselves did something negligent (such as handing the keys to the company truck to an obviously intoxicated employee).

There are also a number of other issues that should be discussed with an attorney before the start of a new business. How much general liability insurance should the company have? What are the dangers of the company not having workers' compensation insurance? What type of language should be included in the company's contract for service that will allow it to collect its attorney fees and interest in case the customer fails to pay? What type of warranty should be offered with the company's product or services and what warranties should be excluded?

These questions and many others should be reviewed with legal counsel at the start of your business to help avoid pitfalls in today's ever changing business environment.