Small Business Law

What Makes a Business a "Small" Business?

A small business owner may operate a convenience store, a plumbing service, a salon, a fast food franchise, or virtually any type of business in a given field. While there is no clear definition, small businesses share some common characteristics. They are independently owned and operated, organized for profit, and are not dominant in their field, as defined by the U.S. Small Business Administration (SBA).

The vast majority of businesses in the U.S. are considered small businesses, which employ roughly half of all workers in the country.

What Legal Issues Do Small Business Owners Typically Encounter?

All businesses will encounter certain legal matters, such as questions about taxes or drafting contracts. But a small business owner's legal obligations and risks generally depend on the type of industry, business model, inherent risks involved, state laws, and a host of other considerations he or she faces. It's always best to consult an attorney before opening up shop, but anyone starting a small business will likely be confronted one or more of the following legal issues:

• Choosing a legal structure (such as a partnership, limited liability company, or corporation);
• Hiring and managing employees in accordance with state and federal employment laws;
• Protecting inventions and trademarks through intellectual property law;
• Extending credit and collecting on past due amounts in accordance with federal laws;
• Complying with health and safety regulations when constructing or preparing a work site;
• Maintaining the required level of workers' compensation insurance coverage.

How Can an Attorney Help My Small Business?

While small business owners act in a number of capacities, the successful entrepreneur knows when to ask for help. This is especially true of legal matters, which can sink a business if handled poorly or ignored altogether. Certain things can sometimes be done without a lawyer, such as creating a legal partnership agreement, submitting necessary tax forms, and drafting contracts with partners.

But some issues are too time-consuming, too complex, or too high-stakes to handle without the care and expertise of a business lawyer. These include defending against wrongful termination claims by former employees, making a "special allocation" of profits and losses, or negotiating for the acquisition of another company's assets. Again, your legal needs will be unique to your business.

And while seeking counsel for complex legal issues is smart, retaining an attorney to help prevent legal problems from occurring in the first place may be even smarter.