Small businesses face a mountain of expenditure and it’s not always easy to work out where you can save money without putting your business at risk. Legal expenses can mount up quickly to the point where they eat away at or totally consume all the profits in a small business.
There are times when there is no substitute for legal advice and other times when you can cut that legal bill down dramatically by doing your own legal work but which is which? Today, we’ll walk you through the areas of legal work in a small business where you should be able to do the work yourself without cutting any corners and putting your business at risk.
Legal Requirements on Small Businesses
The basic rule of thumb is that if something can be done relatively easily and the processes around it are crystal clear – you should be able to do it yourself. If, on the other hand, you’re facing a complex dilemma; you’ll probably find that it’s best to use a lawyer.
In general, if you’re going to run a small business then you’ll need some sort of legal structure for that business. If you intend to set up a sole trader or an LLC; this can be done fairly simply by someone with no legal background. The only times you might need a lawyer is if you’re trying to develop a complex partnership, shareholder structure or if the sums you’re going to place in the business are in the millions.
Try the government’s Small Business Association (SBA) website for simple advice on how to create each form of entity and the process for that.
The paperwork for new hires that must be lodged to the state and federal governments isn’t all the complicated – though it may look like it from a quick glance at the forms. It can be tempting to hand this kind of thing over to a legal advisor but if you go to the relevant website and do the filing online; they walk you through the process step-by-step and it’s not hard to compete I-9s, etc. yourself.
Your employment agreements don’t need to be worded in legalese either; you can sit down with the employee and create these together – you just want to ensure that they are written in a way that creates a basic agreement about how things will work and then get it signed. This should, in theory, reduce the chances of a disgruntled employee taking action later down the line.
Contractor agreements are very much the same and you don’t need a complex contract to engage a contractor. We like the free template contract at The Freelancers Union but you can amend this as you see fit to suit your circumstances.
Confidentiality and Intellectual Property
Creating trademarks is easy and you don’t even need to register them to begin getting benefit from a trademark (use TM with your trademark if it’s unregistered – it can still be defended in court). You can always go with a registered trademark® later. If you do decide to register a trademark there are plenty of online services that you can use to register with low fees compared to a lawyer.
Copyright doesn’t legally require registration at all for it to be defensible. But the United States is the only country on earth which grants those who do register copyright additional rights under law (including stiff additional penalties for copyright violators in the case of legal action) but you don’t need a lawyer to register copyright – you can do that yourself online with The Library of Congress (there is a fee of $35 per registration to be paid).
Patents, on the other hand, aren’t quite as straightforward. You will need to engage an attorney with specialist knowledge of the patent system to get your ideas protected. It’s worth noting here that you should not disclose any details of an idea you intend to patent to anybody outside of the creation team and you should have confidentiality agreements in place to ensure that they don’t talk about it either.
Which brings us to the non-disclosure agreement (NDA). The NDA is one of the most common business tools in use today. There’s no requirement to use a lawyer to draft your NDA there are literally hundreds of templates you can find through Google that you can put into use in your business. We’d recommend that before you put an NDA into use; you read through it carefully and try to amend it so that it perfectly relates to your business’s situation.
We don’t, on the other hand, generally recommend drafting the NDA’s little brother the Non-Compete Agreement (NCA) without legal advice. NCA’s are complicated in many parts of the world as they may be viewed in court as “unfair restraint of trade” – so if it’s important that your NCA is binding, get a lawyer to put it together.
The longer you leave a debt to go by; the harder it will be to get a client to pay up. That doesn’t mean you should threaten legal action immediately a client is a day late but it does mean that you should have a process in place within your business to encourage the client to pay before you take legal action.
It is a good idea to call a client (or email them) immediately that an account goes overdue. You should then have some in-house letters that you use to remind the client after 15, 30, 60, and 90 days – you don’t need an attorney to draft these for you. Just ensure that they are clear and consistent about what the problem is and what the client should do to resolve the problem.
Then if they really don’t pay up – you can take legal action knowing that you’ve got the documentation ready to help a lawyer take the case on and get your money back.