If you have small business, the thought and expense of being involved in a lawsuit can keep you up at night. Legal disputes are sometimes unavoidable in the course of conducting business, but business owners can take certain steps to mitigate the occurrence of foreseeable issues. By executing proper procedures at the outset of starting a business, owners can avoid litigation, loss of income and disruption to their normal business operations.
A business’s first task is to choose its business entity. Whether one chooses to become an LLC, partnership or corporation will depend on a variety of factors, and there are advantages and disadvantages to each business form. In general, opting to form an LLC provides significant personal liability protection and should be considered for many small businesses. In addition, there are times when a business begins operations as one entity and circumstances may call for a transition to a different form.
One of the most important concerns for any small business is executing well-drafted contracts with vendors, customers, employees, independent contractors, and others providing goods and services. A frequent cause of business litigation is the failure by business owners to put such agreements in writing. Often the parties have a past relationship or the business owner is eager to start doing business. In either case, however, failing to properly document the rights and obligations of the contracting parties may result in disputes and unwanted litigation
While executing written contracts is necessary for all aspects of the business, this is particularly important with respect to employees. California is an at-will employment state, which means that either the employer or employee can terminate the relationship at any time. It is advisable to specify the roles and responsibilities of those doing work for the business, and doing so in writing can help avoid disputes later. In addition to utilizing contracts, businesses usually maintain some type of employee handbook, which describes employment procedures and summarizes applicable federal and state law regulations. This is especially relevant for outlining procedures for adhering to and reporting violations of anti-discrimination and anti-harassment laws. In the absence of an employee handbook, or in businesses with very few employees that may not have such documentation, employees should receive annual training in complying with discrimination and harassment policies. The contracts, policies, handbooks, and work manuals that are used to define the working relationships should also be reviewed periodically as employment relationships evolve.
Consulting with a lawyer who has expertise and knowledge in the area of business litigation can help you navigate around and, when necessary, through legal disputes. Shane Coons is an experienced litigator and can help business owners implement necessary contracts and procedures for their businesses success. Call Shane Coons at 949-333-0900 or visit his website, www.ShaneCoonsLaw.com.