Small business owners deal with numerous challenges. Between developing outstanding products and building a loyal client base, they’re often too busy with operations to pay sufficient attention to the legal implications of managing a business.
Unfortunately, when they face a lawsuit from an employee, client, or vendor, they come knocking at a lawyer’s door. Suppose you’re dealing with small business clients as an attorney. In that case, it’s up to you to familiarize them with various business laws and help them navigate various legal aspects of running a company.
In this blog post, we’ll outline a few useful tips you can use to simplify the lives of your small business clients. Let’s dive right in.
1. Dig Deeper Into Their Employment Structures
Startups and small businesses don’t follow the same recruitment processes as larger corporations. While some companies might lack a concrete recruitment framework, others work with part-time employees and freelancers from different regions.
Having a thorough idea of your client’s recruitment process and employment structure will help you identify employment laws and standards applicable to their business. For instance, if they’re hiring full-time employees from a foreign country, they might be liable to provide employees with additional benefits.
Similarly, the minimum wages for employees in different countries will vary. Also, if your client has been working with freelancers for a long time, they could be entitled to special benefits. Understanding their employment structure will equip you to help your client avoid the legal pitfalls of overseas recruitment.
In cases like these, it might make sense for them to use “employer of record” services like Remote, which takes care of all the local legal requirements on the employer’s behalf.
While you’re at it, ensure they maintain proper documentation for each employee and get necessary documents, such as non-disclosure agreements, signed at the time of hiring. HR platforms like Bamboo can help your clients streamline onboarding workflows and turn them into self-service experiences for new hires.
2. Safeguard Their Intellectual Property
Small businesses are often too caught up in the rigmarole of reaching the right customers and selling their products.
As a lawyer, it’s your responsibility to ensure that their intellectual property, such as brand logo and product design, is protected.
Also, it’s a good idea to double-check that they don’t use any copyrighted material in their branding and marketing campaigns.
3. Organize Their Client Communication
Small businesses often make the mistake of relying on oral agreements while finalizing deals with clients. While verbal agreements are legally enforceable, using them as evidence can become challenging in the event of a lawsuit. It’s often your client’s word against the litigant.
The best way to avoid such scenarios is to help small businesses maintain a thorough paper trail of their client conversations. However, collecting and storing physical copies of receipts, invoices, estimates, and contracts can be painstaking.
Instead, advise your clients to use an online tool to digitize their paper trails. These tools help small businesses share estimates with clients, get approvals, and collect payments. Using vcita’s CRM as ground zero for managing customer lifecycles, small businesses can issue service estimates that spell out relevant business terms and attach any relevant documents to the estimates as well.
They can even ask clients to digitally sign an estimate and automatically issue a prepayment invoice after receiving approval. Using such tools helps eliminate the need for physical paperwork and speeds up your client’s business processes while protecting them from legal disputes in the future.
4. Understand Their Business Structure
You can’t help a small business owner navigate various legal hassles without first helping them understand how their business is structured as an entity and what the regulatory implications of that structure might be.
Typically, entrepreneurs can choose one of the following legal structures to establish their business:
- Sole proprietorship
- S corporation
- Limited liability company (LLC)
The type of business structure impacts various aspects, including compliance regulations and taxes applicable to your client.
Moreover, if you’ve worked with small business owners, you’ll know that many of them prefer to register their company as a sole proprietorship or partnership. It minimizes the need for extensive paperwork and speeds up the business setting up and running. The only problem with such structures is the lack of distinction between an entrepreneur’s business and personal assets.
So, if the business faces a lawsuit, the litigant could go after their personal possessions, including real estate, bank accounts, and automobiles. In such cases, consider advising your client to set up a separate legal entity, such as a trust, to prevent personal liability in the event of a lawsuit.
5. Ensure Safe Data Handling
Data privacy and protection have become crucial pain points for businesses across the globe. As the risk of cyberattacks and data breaches escalates, every company, big or small, is vulnerable to such threats.
Besides stalling business operations, these attacks could land your client at the receiving end of lawsuits from clients, employees, and vendors. That, in turn, could wreak havoc on their brand reputation.
Lawyers play a vital role in helping small businesses comply with various regulations and standards and navigate legal disputes. When dealing with small business clients, start by delving deeper into their legal structures and recruitment processes.