Legal Tips For Small Businesses: A Little Prevention Can Save BIG Headaches

NH Business Articles: Legal Tips For Small Businesses

Legal Tips for Small Businesses
A few ounces of prevention can save pounds of headaches later!

By: Edward D. Alkalay, Esq.

Businesses are often vulnerable to a variety of legal issues because the owner's time are usually swamped just running the business, with little time left over for considering potential legal issues. Investing just a little time reviewing your exposure can prevent needless stress and save a lot of money.

Nonpaying customers:  Too often businesses move merchandise rapidly but don't stay on top of the receivables. This often happens in the construction industry. If you have sold goods and services without prompt payment, your cash flow suffers and you have collection problems. This leads to a lawyer's letter to the customer or court. In most cases, you will not recover the full amount owed to you and you will spend time and money on collections. There are several ways to avoid this. First, get advance payment where possible. If that isn't possible, allow customers to pay with credit cards or cash directly after the work is done. If you must sell on credit, verify that your customers are creditworthy when any loss beyond your means is at stake. Finally, if you must pursue collections, adopt an efficient and cost-effective collection practice, which includes immediate contact once payment is delinquent.

Insurance Issues:  When over insured, you're paying too much. If your business is underinsured, you could be jeopardizing your future. Take time to review your property insurance and liability insurance annually to ensure that you have proper coverage.

Personal injury actions:  Slip-and-fall cases and other personal injury actions are often brought against small businesses by plaintiffs who believe that companies will settle rather than fight, even if the claim is not viable. Unfortunately, all too often these claimants are right. To avoid this problem make your premises as safe as you can. Conduct a safety review and look for possible trip hazards, such as torn carpeting or exposed wires, and review other potential safety hazards. Correcting these problems in advance can save many thousands of dollars.

Internet Policy and Security:  If you provide employees with computers and work emails, be sure to have an explicit email internet policy. This policy should state what employees can and cannot do on a computer. For example, you may allow brief personal email exchanges with family or friends, but disallow more extended personal use. It is up to you. However, your policy should be well thought out and communicated to all employees in writing.

Employee workplace issues:  Along the same lines, you should have a written policy for potential employee issues including sexual harassment, discrimination (based on age, gender, race, or national origin), and wrongful termination. Make your company's policy very clear to staff and issue your policy to employees in writing. I have advised many employers regarding these policy issues and have drafted many policies designed to protect employers in the event that these issues should arise. At best, these policies can prevent problems from occurring and, at worst, provide a defense should these issues ever go to court.

Contract disputes:  You should have clear written agreements among co-owners (e.g., buy-sell agreements), and with vendors and suppliers, and often with customers. A contract does not have to be a lengthy with a bunch of "legalese." But it should be clearly written so that all parties understand their obligations. Most contract disputes arise because either there is not a written contract or one or both parties do not understand the contract because it is confusing or ambiguous as to the parties' obligations.

Other issues:  While there are other legal issues which affect businesses, the most important concept to take away from this article is to try and prevent problems before they arise. The saying "an ounce of prevention is worth a pound of cure" applies to businesses just as it applies to health. A conscientious review of policies and procedures before there is a problem can save a business substantial aggravation and money.

About the Author

Edward D. Alkalay is a partner at Alkalay & Smillie, PLLC and is admitted to practice in both Maine and New Hampshire. He can be reached at (603) 447-8994 or  (This article conveys general information and should not be relied on for legal advice without further research and/or consultation with an attorney.)


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