Starting a business takes enormous time and energy. You deserve the well-earned rewards. In today’s complex business and legal environment, many business owners find those rewards diminished by legal issues and unfair competition. Here are 5 tips to protect your business.
Pay Your Bills and Taxes on Time
Paying your bills on time builds a positive reputation. This reputation will serve you better than any advantage gained from holding onto the money until the last minute or delaying payments until delinquencies pile up. This also reduces the possibility of having to deal with collections or lawsuits.
The IRS has special powers of collection. The last thing you want is the IRS seizing assets for back taxes. Even if all you get is an overdue tax bill with penalties and interest, you’ve already burdened yourself with more debt and may face an audit that gets you in deeper. Always make payroll tax payments on time. The IRS can hold you personally liable if you withhold payroll taxes and fail to pass them on the government.
Protect Trade Secrets and Get Agreements in Writing
Trade secrets are the confidential pieces of information that give your business a competitive advantage. Customer lists, manufacturing processes, and projects under development are examples of trade secrets. If competitors get their hands on your trade secrets, they can exploit the information to gain at your expense. For example, they could use the more efficient manufacturing method you invented to undercut your prices or contact people on your customer list and offer to beat your price.
To protect your business, have an attorney draft nondisclosure agreements you can use in various situations. You may need one for employees, vendors, or customers. Since employees have the most access to trade secrets, you may want to employ a non-disclosure/non-compete agreement.
These agreements require the employee to never use trade secrets to compete against you or reveal them to your competitors. A specific NDA/non compete for certain jobs may be necessary. For example, different language is needed to protect the trade secrets a salesperson knows versus the ones a manufacturing supervisor knows.
Having written confirmation of agreements is essential for them to have legal force. In the event of a dispute, you’ll need evidence backing up your case. Without it, the other party knows you lack proof and may refuse, for example, to pay a bill. If you have their written authorization, you can turn them into collections or take them to court. Without it, you cannot enforce your agreement.
Hire Strong Business Counsel
Legal issues can quickly derail a business. To keep your business running smoothly, obtain a law firm experienced in business law. Professionals in business law specialize in contracts, incorporation, taxes, mergers and acquisitions, collections, financing, buy/sell agreements, shareholder agreements, insurance, and other business matters.
When you retain counsel and seek advice early, your business saves big money. Having a law firm on your side that handles routine matters, offers prompt advice when new situations arise and can see you through any legal disputes is essential to a growing business.