What are some common legal issues for businesses?

No business is created equal due to the fact that each industry is different. However, there are a number of common legal issues that all businesses may face at one point or another, regardless of size, industry or structure.

Legal issues are inevitable when running your own business, it is something you can try to avoid by following procedures and laws that are put in place but its only a matter of time before you encounter some type of legal trouble.

What are some types of legal issues?

There are a number of different legal issues affecting businesses. Some of the most common ones include:

Wrong business structure

When first forming a business, you as an entrepreneur should be focused on more than just the product or service you are trying to develop. You should also focus on the structure of your business. For many individuals this term is a bit a vague, so let me explain. You business needs to have a proper form whether that be sole-proprietorship, partnership, limited partnership, corporation or limited liability company. Each of these corporate forms has its benefits and disadvantages. Additionally, if you happen to choose the wrong structure it could lead to legal complications in the future.

Disagreements between shareholders

This issue has been tackled in a previous blog that will be linked here. Shareholder disagreements are usual due to starting a business with other people whether that be friends, family, colleagues etc. Starting a company with someone you know and see on an everyday basis may sound like a good idea until you get into a certain stage of your business. Each individual has a different vision and this is where things can get complicated. In order to avoid this type of legal issue our lawyers suggest drawing up a shareholders agreement that will help mitigate any potential problems. This document will protect your company from stagnation or drifting due to what seems like unsolvable issues.

Legal disputes with employees

Employees are generally a companies greatest strength, they do a lot of the work and provide most of the man power. However, they can also turn into the companies biggest liability. This is why our lawyers suggest that ground rules and regulations are prepared, outlined and implemented from the beginning to avoid any major issues.
There are a few things that need to be done with and for employees from the beginning such as:

• Employment contract – this should outline rights, responsibilities, pay, etc.
• Health and safety guidelines – this needs to be addressed with each employee and they need to understand what is expected of them at any given time in your company.
• Each company should have their own set of rules that outline conduct.

Wrongful dismissal

This is another issue that goes hand in hand with the previous category. Employee dismissal has also been touched upon in a previous post, if you would like to read that for reference click here.
Letting go of any employee is difficult and if done incorrectly, this can lead to legal issues. Generally speaking if you have to let go an employee it is probably best to clearly state and document the reason as to why – especially, if the reason is things such as theft, fraud, assault etc.
When you clearly state and document reason there are less chances of legal issues. If you have any questions about how to best dismiss your employee contact our legal advisers.

Unhappy Customers

Unfortunately, dealing with clients and trying to keep them happy is an inevitable part of the business process. Customer who are dissatisfied can potential file a lawsuit against you and your company. This can be due to faulty products, services etc. A lawsuit from a dissatisfied client can tarnish your brand and ruin your company’s reputation.
Our best advice is to be proactive – especially when it comes to customer support, online message boards etc. It is best to promptly respond to any issues rather than to avoid them and hope they go away.

There are many other issues that can occur & affect your business. If you have any legal issues regarding your business please contact our legal team they will be more than happy to help you.

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