By Princess Jones
Making the decision to be your own boss can provide for great freedom, but that freedom doesn’t come without a cost. You are responsible for not only getting clients, and making a livable income, but you are also responsible for protecting your business and yourself.
One way to handle your business responsibly is by taking your business seriously from the start. Failure to treat your work as a real business can result in legal and financial consequences, some of them very severe. Here are some simple ways to protect your small business from legal pitfalls.
Retaining and organizing documents is probably one of the most tedious parts of running a business, but also the most important. When your documents are organized, you can always find what you need.
Create a physical or electronic system of filing documents. Going digital is an easy way to save space and good for the environment. Just remember to back up any electronically stored data regularly. You want make sure to keep copies of anything related to money or agreements. These are the two areas were problems are most likely to arise.
Organize files into groups by type. For example, you could create a Finances folder, and contain subfolders for Accounts Payable (invoices sent to you) and Accounts Receivable (invoices you send out to others).
Get It In Writing
Get something in writing for any and every job you do. This is so important that it bears repeating: get something in writing for every job you do. Although a verbal contract may be legally binding, it is much harder to prove in court.
Have something in writing that details the scope of the project(s) including deadlines, cost, terms for payment, and what happens if either party fails to meet the terms of the agreement. It may be helpful to include terms that include your client picking up any attorneys fees or legal costs should there be a legal dispute arising out of the contract.
Just as it is important to have a written record of your agreements with clients, it is also important to read everything before you sign it. Anytime you are getting services from a vendor or other entity, read the terms of your agreement. Too often, we sign documents without reading them not realizing that we may be agreeing to something that could come back to bite us like a rabid dog.
Even if it seems like something silly or unimportant, read it! It is good to get in the habit of reading anything and everything before you sign until it becomes second nature.
Know When to Ask for Professional Help
When your business is small it may be okay to do your own taxes and draft your own contracts, but this is highly inadvisable unless you have experience. You may think you can’t afford professional help but you really can’t afford to make costly contract mistake, either.
Any time you think there may be a legal or tax issue, you want to consult a professional immediately. You can contact your local Bar Association for referral to attorneys specializing in small businesses. Depending on the type of business, there may be free or low-cost legal assistance available to you.
Photo credit: Legal written on wooden cubes from Gustavo Frazao/Shutterstock