CHASE LAW NAVIGATOR

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OPERATIONS LEGAL ISSUES

Administration of a business is complicated and any number of issues can arise at any time. Knowing the risks and how to prepare for them is a good way to protect your business.

BUSINESS LICENSES

What are some of the potential issues that could arise when hiring family?


Other employees may be discouraged if they think you are engaging in nepotism. Despite this, the real danger can be when the lines between work and personal life become blurred and familial relationships can be damaged. Some family members may even try to take advantage of the relationship, so there must be clear boundaries in place to avoid problems. Learn more here: https://www.business.com/articles/should-i-hire-family/




Is it ok to have only one attorney to assist two people in the execution of a business deal?


It is usually unadvisable for an attorney to represent both the buyer and the seller because they often have contrary interests. You would be protecting your company by having an attorney who only has your companies best interest in mind and allows you to negotiate freely. Learn more here: https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_7_conflict_of_interest_current_clients/comment_on_rule_1_7/ https://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=2062&context=lsfp




Does my attorney represent me or the business?


An attorney who is employed or retained by an organization will represent the company. Not an employee, the manager, or even the Board of Directors. In this scenario, the attorney will keep the best interest of the company in mind above other interests. Learn more here: https://www.generalcounsellaw.com/who-does-your-lawyer-represent-you-or-your-business/





CONFLICTS OF INTEREST

What are some of the potential issues that could arise when hiring family?


Other employees may be discouraged if they think you are engaging in nepotism. Despite this, the real danger can be when the lines between work and personal life become blurred and familial relationships can be damaged. Some family members may even try to take advantage of the relationship, so there must be clear boundaries in place to avoid problems. Learn more here: https://www.business.com/articles/should-i-hire-family/




Is it ok to have only one attorney to assist two people in the execution of a business deal?


It is usually unadvisable for an attorney to represent both the buyer and the seller because they often have contrary interests. You would be protecting your company by having an attorney who only has your companies best interest in mind and allows you to negotiate freely. Learn more here: https://www.americanbar.org/groups/professional_responsibility/publications/model_rules_of_professional_conduct/rule_1_7_conflict_of_interest_current_clients/comment_on_rule_1_7/ https://lawdigitalcommons.bc.edu/cgi/viewcontent.cgi?article=2062&context=lsfp




Does my attorney represent me or the business?


An attorney who is employed or retained by an organization will represent the company. Not an employee, the manager, or even the Board of Directors. In this scenario, the attorney will keep the best interest of the company in mind above other interests. Learn more here: https://www.generalcounsellaw.com/who-does-your-lawyer-represent-you-or-your-business/





LITIGATION/LIABILITY ISSUES

My business is being threatened by a party who says they are going to sue us. It is making it difficult for our company to plan and causing our investors to be worried. How can I stop this?


If someone is threatening to sue but not going through with it, you can either wait until they follow through or take action ahead of time. If the threat is disparaging or impeding your business from moving forward, you could also sue the threatening party for trade libel, or sue them to get a declaratory judgement from the court on the legality of the matter so that it can be put to rest. Once the court decides a matter of law in your case, the threatening party will be precluded from bringing it up in a subsequent proceeding and your investors can rest assured that the business is in the right. Learn more here: https://www.law.cornell.edu/wex/declaratory_judgment




How can I protect my business from liability?


Policies and practices can help protect your business from liability. Sometimes liability waivers (contracts) signed by your clients may be an option as well. But of course the best way to protect your business from liability is liability insurance! Learn more here: https://www.progressivecommercial.com/business-insurance/general-liability-insurance/




Is it better to settle or fight in court over an issue of liability?


A business owners number one concern should be running his or her business, not on winning or being right. This is a general statement, however, that doesn't answer the question at hand. Whether you settle or fight should not depend on your personal ego, but factors such as business reputation, the amount of money at stake, and the personality of the other parties will all need to be considered in deciding how to proceed on a matter of liability. Sometimes, even if you are not at fault, settling is the better way to go, assuming your business just needs to move on. Also, any settlement you pay should be accompanied by an agreement by the threatening party not to disparage your company and an agreement not to pursue your company in litigation in the future. Sometimes the value of taking the threat away without going through the hardships of trial is the most logical path forward. Learn more here: https://fusecfo.com/blog/business-lawsuit-fight-pay-settle/





RECORD KEEPING FOR THE PURPOSE OF AUDITING

How important is it that I maintain copies of receipts for my expenses?


You need this information for your own protection and tax returns. The more documentation you have, the better. Learn more here: https://www.mdtaxattorney.com/resources/why-is-it-important-to-keep-receipts/




How meticulously should I keep records of my expenditures?


Identify the source of receipts, keep track of deductible expenses, prepare tax returns. Specifically, some of the many items you should keep are invoices, receipts, payroll, business transactions, journals, ledgers, previous tax returns, travel, entertainment, transportation, gift expenses, employment taxes, asset, business property, canceled checks or bank statements, credit card statements of any card used in association with the company, and any forms such as 1099, K1, W2, or ect. Keeping these items for at least 7 years is a good idea. The IRS has specific time needs for each document. Learn more here: https://www.irs.gov/businesses/small-businesses-self-employed/why-should-i-keep-records




What should I do if I lose some of my receipts for items purchased?


Check bank statements, or any other means of gaining a record of the transaction. If the documentation was lost through no fault of your own, such as in a natural disaster, the IRS may show mercy. Make a detailed explanation for any lost documentation. Sometimes a pattern of spending is evidence enough. If you can find the name of the item, when you bought it, and where, you can figure out the cost this way. Use modern technology to your advantage. Learn more here: https://www.hrblock.com/tax-center/irs/audits-and-tax-notices/im-being-audited-what-if-i-dont-have-receipts/





RISK MANAGEMENT

How can I mitigate bad reviews about my business?


Make sure your product or Services information is accurate. Decide to make the necessary changes for customer experience so they feel heard and respected. Maintain a transparent system of operation let the public know you are being honest with them. Learn more here: https://hbr.org/2020/05/5-principles-for-responding-to-customer-reviews




What is the best way to reduce the risk of my customers getting hurt as a result of my business?


Maintain high quality equipment and tools while also regularly inspecting products and the place of business for potential hazards. Make sure you post proper warning signs physically and on products. Learn more here: https://www.insureon.com/blog/ways-to-prevent-customer-injury-property-damage




How can I best protect my business from unavoidable business risk?


Adequate insurance coverage is important for any field. This along with proper legal advice from an experience attorney or legal advisor is also important so they can advice you specifically on your fields needs. Learn more here: https://www.investopedia.com/articles/personal-finance/072315/top-ways-manage-business-risks.asp