The Crucial Role of Legal Benefits for Small Businesses
Small businesses are the engines of the economy and the heartbeat of communities. Yet they also face unexpected risks. Insurance is one way to address these risks. The most valuable coverages are legal benefits, legal assistance plans and insurance. Learn why these supplemental perks are growing in popularity, what they entail, and how SMBs can offer them easily and affordably by working with a PEO.
Legal Counsel
Lawyers can help ensure that a small business adheres to all applicable laws, whether employment law (such as family medical leave and sexual harassment training), tax law, mergers, acquisitions, or workplace safety laws. They can also provide a wealth of information to reduce business liability, preventing the loss of intellectual property or expensive lawsuits. Legal counsel is necessary for any business, from a small startup to an established large company. Many businesses consider their attorneys a luxury they only hire when faced with a major issue, but getting one involved early on can prevent problems. Underhill Law Group provides expert legal assistance for various business issues. You can contact them today to see how they can help your business thrive.
Litigation Avoidance
It’s a cliché, but lawsuits can bankrupt small businesses. Aside from the initial legal costs, litigation can also sever business relationships and damage reputations that can take years to repair.
Practicing consistent and ethical customer service can help prevent disputes that may lead to litigation. Maintaining confidentiality of sensitive identifying information is another critical preventative measure. Accurate recordkeeping, particularly transactions and communications with customers and employees, is also a good practice. While no company can avoid every possible legal claim, a well-trained business law attorney can offer guidance to limit risk. A lawyer can also review contracts and recommend specific clauses that can provide extra protection in the event of a dispute. These may include mandatory mediation or fact-finding evaluation provisions or risk-shifting avoidance provisions such as disclaimers and release or waiver language. It can reduce the potential for expensive and bruising litigation.
Alternative Dispute Resolution
Alternative dispute resolution enables legal matters to be resolved outside of the courtroom. It can be a more cost-effective and time-efficient option for small businesses. Unlike litigation, which is subject to appeals and often results in lengthy trial hearings, arbitration is generally final and binding on all parties. ADR consists of various processes, including mediation, negotiation, conciliation and arbitration. Most involve a neutral third party who helps disputing parties come to an agreement and avoid litigation. Some are more formal than others, but all aim to resolve legal disputes without going to court. ADR is less hostile than litigation and focuses on compromise, which can help business owners keep their relationships with customers and suppliers intact. It also promotes faster settlements.
Business Structure
Your business’s legal structure determines everything from day-to-day operations to the taxes you pay and how much of your assets are at risk. It also impacts your ability to raise funds and the paperwork you need to file. It’s important to assess your needs and seek professional guidance when choosing a business structure. The most common structure is a sole proprietorship. This type of setup is the simplest and easiest, but it comes with the disadvantage that your assets are at risk in case of debts or lawsuits. Another option is an S corporation. This structure protects liability and passes business profits directly to owners through pass-through taxation. However, it has two limitations: shareholders can’t exceed 100 people, and all must be United States citizens. If you want to enjoy the benefits of an S corporation without these restrictions, consider forming an LLC. It offers the best of both worlds and is less expensive to establish than a traditional corporation.
