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Tips for Avoiding Legal Issues for Your Business

Legal issues can cost your business in terms of time, fees and fines and can also result in a loss of your business or professional licenses, bankruptcy and closure. It is not always easy to avoid these issues, especially as you grow from a small business to a successful large corporation, but there are some things you can do before trouble pops up to keep going strong. While most of these tips are best done at the startup phase, you can incorporate some later such as improving record keeping habits, finding a good lawyer and hiring transcription services for important meetings.

Hire Professional Transcription and Translation Services

Translators and transcriptionists are valuable outsourced talent to bring into meetings with potential investors and business partners to help keep track of topics covered and ensure that those topics are being understood by those present. You can sometimes find these professionals from court reporters Sacramento firms as well as video conferencing and remote deposition services if needed. While most entrepreneurs will bring an interpreter to meetings when a common language is not assured, many will not think to secure transcription services for a written record, which can lead to problems if disputes arise later.

Keep Thorough Records

The transcripts of your meetings should be just one of the records you keep as documentation of verbal or written agreements, stock issuances or transfers or the rights and responsibilities of shareholders can all be required to avoid personal liability in tax issues, accident or injury cases and much more. It is a good idea to work with an attorney and an accountant to determine which documents you need to keep and for how long, and you should also have a backup of your files in case your original is lost or damaged.

Learn the Laws and Regulations

Ignorance of the laws and regulations surrounding your business and professional practices is not a defense, so it is a good idea to learn what those things are before you start your company. This includes things like which liquor licenses your restaurant will need, employment and labor laws and which locations your type of company is prohibited to operate in. Depending on your industry, you may also be subject to environmental, import or export regulations. The best way to avoid legal issues with the government is to operate inside the law from the very beginning.

Hire a Good Attorney

A good corporate or business attorney can help you set up your business within the necessary laws and regulations, draft business-related contracts and answer any questions you may have about potential legal liabilities. It is important to retain a lawyer who has experience working with companies in your industry because he or she can point out common pitfalls your business may face and how to best avoid or deal with them if they come up.

Have Clear Contracts with Partners and Employees

One of the most common legal pitfalls businesses fall into is not having clear contracts with partners, investors or employees. These contracts should include lists of rights, responsibilities and liabilities as well as outline the process for ending the contract. If you do not have a documented exit plan for your partners and one decides to end the partnership, you may have to liquidate and close the business. It is similarly important to make sure that your employees know that the employment contract is “at will” or that either party can terminate employment for any reason, as well as that illegal or unethical behavior is not tolerated by your business. This protects your company from legal liability for many of the actions your workers take as well as shields you from wrongful termination suits in most cases.

Understand Intellectual Property Rights

Protecting your intellectual property with copyrights, trademarks and patents gives you legal recourse if someone else tries to use your branding, original ideas or other intellectual property without proper permissions. These things also protect the rights of others, so it is important to understand which things are allowed and which are already claimed by another party before launching a business, product line or publication. You can work with your attorney to secure your intellectual property and to draft contracts for employee non-competition, confidentiality or invention-assignment agreements.

Avoid Litigation When Possible

Litigation takes more time and money than most business owners expect and can drain critical resources even when resolved in your favor. Sometimes there is no other choice but to seek legal compensation or action but going through arbitration or mediation can be a better route. Settlements and other dispute resolutions can save your company in the long run and it is a good idea to consider arbitration clauses in your contracts for this purpose.


Avoiding legal issues in the world of business is sometimes impossible, but there are many things you can set up from the beginning of your company to help. By working with an attorney and other legal services you can build better contracts, understand the applicable laws and regulations, and have the types of documentation and records needed to resolve disputes.

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