Most Common Legal Risks for Businesses
Many people have dreams of being their own boss, but running a business by yourself or even with a partner is not for the faint of heart. It’s not easy at all. You think working 9 to 5 for a boss is hard? Running a business is even harder.
There are many laws and regulations that entrepreneurs need to abide by. There are a lot of risks involved, and you need to stay ahead of these risks at all times or risk losing your business and livelihood. Business risks can lead to financial consequences such as legal fees, fines, penalties, and settlements. Operational issues can lead to significant restructuring or even a full-on closure. A business can also face reputational damage. Negative publicity can diminish customer trust and loyalty.
With the right knowledge and preparation, you can rise above the risks and position your business for success. Here are some common legal risks you should be aware of.
Employment Law Violations
Businesses must follow federal, state, and local employment laws or else they could face fines, lawsuits, and reputational damage. Common issues include:
- Wrongful termination claims from fired employees.
- Discrimination or harassment lawsuits.
- Wage and hour disputes, like unpaid overtime or misclassification of employees as independent contractors.
Contract Disputes
Contracts govern business relationships with vendors, customers, landlords, and partners. Disputes can lead to costly litigation and damaged relationships. Disputes commonly arise over:
- Breach of contract when one party fails to perform services or pay on time.
- Ambiguous contract language leading to misunderstandings.
- Disputes over contract renewal or termination.
Intellectual Property Infringement
Businesses must protect their own intellectual property and avoid infringing others’ rights. Failure to do so can result in expensive lawsuits and product recalls. Common risks include:
- Accidentally using copyrighted images, music, or software.
- Infringing trademarks in branding or advertising.
- Failing to patent proprietary inventions, leaving them vulnerable.
Regulatory Compliance Issues
Businesses often must comply with the following or fines, shutdowns, and legal action:
- Health, safety, and environmental regulations.
- Industry-specific licensing.
- Consumer protection laws in terms of advertising and product labeling
Product Liability
If a product causes injury, property damage, or financial loss, businesses may face:
- Lawsuits for defective design, manufacturing defects, or lack of proper warnings.
- Class action lawsuits if a product affects many consumers.
- Product recalls and regulatory investigations.
Many product liability issues result in lawsuits and costly settlements.
Tax Compliance Issues
Businesses must comply with tax laws at the local, state, and federal levels or else face audits, fines, penalties, and even criminal liability. Risks include:
- Underpaying or misreporting income.
- Misclassifying employees to avoid payroll taxes.
- Failing to file required documents on time.
Learn More About Corporate Law
Operating a company is risky business. No matter what type of business you decide to form, there are legal issues to contend with.
Protect your business with help from Orlando corporate lawyer B.F. Godfrey from Godfrey Legal. We can discuss your business’ short-term and long-term goals and address any concerns. Schedule a consultation today by filling out the online form or calling (407) 890-0023.
Source:
metricstream.com/learn/legal-risk.html
