The Top 5 Mistakes Businesses Make Without Legal Counsel

Top 5 Mistakes Businesses Make Without Legal Counsel

Many businesses make the mistake of waiting until a problem arises to seek legal help. This reactive approach can lead to costly consequences.

Here are the top five mistakes businesses make without legal counsel:

  1. Choosing the Appropriate Entity Type

The available entity types and the rules associated with them vary by state. It’s important to select the type that fits the needs of the business and complies with any associated requirements. For example, businesses offering professional services, such as medical practices or law firms, often need to establish a professional LLC or corporation. These entities have additional requirements, such as ensuring that all owners are licensed to provide the services.

2. Establishing and Documenting Roles

As a business grows, so do the complexities around roles and responsibilities. If these roles aren't clearly defined and documented, confusion, misunderstandings, and disputes can arise, which hinder growth and lead to costly internal conflicts.

3. Misclassifying Independent Contractors

Simply referring to a worker as a contractor doesn’t automatically make them one. Determining whether a worker is an employee or independent contractor requires an individualized assessment of relevant factors. Misclassification can result in significant legal and financial consequences, including fines and tax obligations.

4. Employee Handbook

While many laws require employers to implement specific policies, there is no law that says you must have an employee handbook. But whether you have one employee or one thousand, your business should have an employee handbook. A handbook is a valuable tool that helps foster workplace culture, increase operational efficiency, and ensure compliance. When creating an employee handbook, it’s important to remember that one size doesn’t fit all. Beyond making sure the policies in your handbook are compliant, it’s crucial that they align with your business’ needs and reflect its values and culture.

5. Unfavorable Contracts

Contracts are often bogged down with a lot of legalese. It is important for businesses to understand what they are agreeing to and negotiate terms that are favorable to them.

At Levene Legal, we help you address these issues before problems arise. We provide affordable legal services, without the legal jargon.

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