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5 Legal Problems Small Businesses May Face

5 Legal Problems Small Businesses May Face

The hassle of running a small business is easily underestimated. From customer relations to financial management, there are many things to manage and one of the most important is legal compliance. Unfortunately, small business owners can find themselves in various legal quandaries due to their limited resources.

Here are some of the most common legal problems that small businesses may encounter.

Copyright Infringement

This is a common issue, especially among online businesses. By using images and other creative works without permission, small business owners may be liable for copyright infringement, leading to a costly legal battle and business closure in extreme cases.

Say you find a picture on a website and post it on your website. Even if you don’t profit from its use, the owner of the copyright may still sue you for damages.

It’s important to properly license any material or content that you use for your business or make sure that it is in the public domain.

Employment Law Violations

When hiring employees, businesses must comply with employment laws, even small businesses. From minimum wage disputes to discrimination lawsuits, small businesses may find themselves in a number of employment issues.

For instance, a small business owner who fails to pay employees the required minimum wage could be sued for back wages and damages. Similarly, if discrimination is found in hiring practices or other aspects of employment, then a lawsuit may also be initiated by disgruntled workers.

Contract Disputes

Small businesses often enter into contracts with vendors, suppliers, customers, and other stakeholders. If the terms of a contract are breached by either party, then there can be serious repercussions.

For instance, a small business may fail to make payments to its supplier on time due to financial problems. If the supplier terminates their contract as a result, then the business may have to face legal action.

Tax Issues

Tax compliance is a major issue for small businesses. Failing to pay taxes on time or accurately can lead to hefty fines and even criminal charges that may require the services of an appeals lawyer in extreme cases.

For instance, if a business under-reports its income, then it can be fined for tax evasion. Similarly, if the business fails to pay taxes on time, then the IRS may issue a penalty or garnishee wages from employees.

Zoning Laws

Zoning laws are regulations that govern land use. They vary from state to state but commonly refer to restrictions on the size and type of buildings that can be built in a certain area.

For instance, if a small business wants to open up shop near residential homes, then it might need to adhere to zoning laws that restrict building size, noise levels, and hours of operation. Failure to comply with these laws can result in fines or lawsuits from disgruntled neighbors.

These are just some of the legal issues that small businesses may face. Overall, understanding and complying with legal requirements is essential for the success of any small business. To help mitigate various legal issues, it’s important to seek advice from a qualified attorney or other legal professional when necessary. This way, you can ensure that your business runs smoothly and in compliance with the law.