Whether large scale or small, a business is a business and needs to be operated as such. You have invested a lot of your money and time into strengthening it. And once it is established, you reap long-term benefits out of it. The point is, not all small scale businesses reach their desired positions in the corporate environment. Faced by lots of hardships, your efforts to establish a small scale business mostly end in vain due to lack of attention to detail and responsibility on your part.
Small businesses can turn profits faster than large scale ones. But because you think of it as just a small business, you tend to avoid important legal formalities and ultimately lose your business.
Here are some of the most common legal mistakes committed by small businessmen.
Not Entering Into a Proper Legal Contract with an External Party
Many small businesses enter into agreements without having advice from lawyers, any legal stamps or signatures by other party. People think that signing a formal contract is just a waste of resources. However, whether internal or external, a legally binding contract is very important. You may ignore the need for legal stamps in internal contracts, but when signing a paper with an external party, legalities must be invoked.
Undefined Legal Roles
Undefined roles and designations can create a great mess for small businesses. The word designation, can literally shake the foundation of your business if you do not assign the position to all your employees legally. The designation defines the pace of work and their efficiency, creating a sense of ownership. Therefore, even for your small business, ensure that the legal paperwork is always complete and up-to-date. This will instil in the employee a sense of belonging.
Having Legal Financial Security
Claiming or conducting an investment without receipts and bills can frame you as a criminal rather than innocent party involved in the operation. In the same manner, budgeting inefficiently for taxes could lead to serious problems. According to Australian Tax Office (ATO), in such cases, a legal action can be taken against you, telling you to close your business for recovering unpaid tax.
To prove you’re in the right if need be, you should have receipts and bills of your paid taxes.
Future Planning For Your Business – Legal Successor
If you’re an owner of a small business, don’t neglect the importance of future planning of your business. You need to decide who will take care of your business once you are incapable of doing it yourself. Moreover, choose who can make decisions in your absence. Also, make sure to invest your time and attention on the person you want to take your place in your absence. Once you are sure of the decision, get a proper will made by your lawyer for this purpose.
Smart people learn from the mistakes of others. So, be prudent and don’t be oblivious to your business’s worth. If you’re investing your time and money, make sure to execute the whole task professionally.