Covered in this episode of Legally Sound Smart Business are some typical business mistakes blunders small businesses often make and how to avoid them.
Blunder #1: Copying and pasting agreements
It may sound like a good idea at the time, but this blunder comes with hidden pitfalls. Having an attorney draft terms that are specific to your company’s products and needs can actually save your company substantial time, money, and avoidable liability.
If you choose to forego an attorney, at the least, read the terms line-by-line, to ensure that you understand everything. If there is something you don’t understand, you should not be using it.
Blunder #2: Creating a brand without doing research on the name
One of the worst things that can happen to a new business is for the owners to spend a substantial amount of time and money promoting a certain name, only to find out it’s already being used. Even if they haven't registered a trademark, someone might own the rights simply because they were using it first.
At the very least, a Google search is an absolute must. A recommended search engine that does a worldwide search can be found here: https://www3.wipo.int/branddb/en/.
Blunder #3: Misclassification of workforce
It is one of the most common blunders, yet the negative effects of misclassification can be staggering. One worker claim can trigger an audit of your entire workforce by any number of state and federal agencies. These agencies have the right to issue heavy penalties and interest on taxes and wages, liens, and even injunctions. Businesses can still be subject to crippling class-action suits with multi-million dollar consequences.
Err on the side of classifying as an employee and assume the employee is non-exempt.
Blunder #4: Partnership agreement not signed by all parties
After spending time discussing the terms of your partnerships, make sure you get in writing--and do not commit blunder #1 by just copying and pasting an operating agreement found online.
Blunder #5: Not documenting employee performance
Documentation provides evidence that supports management decisions to take unfavorable action such as discipline or termination with an employee. This was discussed in our previous episode 311.
Full Podcast TranscriptNASIR: Today, we are covering blunders in the business world. We’re not just talking about a mere mistake.
MATT: It’s a matter of cost and time.
NASIR: To me, a blunder in business can result in substantial liability or exposure or cost or time.
MATT: That’s when the target on your back gets a lot bigger.
NASIR: Don’t do it.
This is Legally Sound Smart Business where your hosts Nasir Pasha and Matt Staub cover business in the news and add their awesome legal twist. Legally Sound Smart Business is a podcast brought to you by Pasha Law PC – a law firm representing your business in California, Illinois, New York, and Texas. Here are your hosts, Nasir Pasha and Matt Staub.
NASIR: All right. Welcome to our podcast! Today, we are covering blunders in the business world.