What are the primary legal issues a small business needs to consider, anticipate, or expect?
One I already know is the type of business - whether Sole Proprietor, LLC, Corporation, etc. Others are insurance and business licenses - especially for some types of businesses more than others. I'm really looking for general guidelines that apply to most or all business types as a starting point and mainly in the United States.
I can add two that can be huge..LEASING and TAXES.
LEASING - This is often overlooked so make sure to read the fine print of any lease carefully...or better yet, don't lease at all Buy a building for your business if at all possible or work out of your garage if you have to (I started in my 11 ft x 11 ft shed). But make sure of your zoning and local laws. Make sure that you enter a building that does not share utilities, or services, etc...this can be a real headache. Also, if you start emitting fumes/dust or making too much noise next to a residential area, you will likely have problems. And don't try to grow too fast...it can kill you. (aka, don't rent too big of a place, rent the MINIMUM you can safely work in). Once your BUSTING at the seams with business, then carefully consider your next expansion and associated costs.
TAXES...granted everyone knows this, like your business umbrella insurance, product liability insurance (if required), recall insurance (if necessary), etc...but my best advice for anyone going into business is to hire a tax professional (and not H&R block) but a company or better yet tax individual that will legally represent you in the event of an audit. I was audited for 3 consecutive years...they only found $100 in total that I could not account for...needless to say, there were NO changes to my tax return...score 1 for a small business! My accountant was there for me the whole time, actually THERE and spoke to them for me. If you think going through this with your accountant next to you is bad, imagine doing it without.
Keeping abreast of tax law is nearly IMPOSSIBLE unless you are a tax professional.
I HATE taxes...and having an accountant do your taxes and verify your bank statements/deposits etc. is worth every penny. I can say that my account has paid for herself/themselves, in saving me thousands on my returns.
You need a attorney that handles small businesses. one of my clients can defiantly help you if you do not have one already. Let me know if you would like his info.
I suggest that you view your business from the perspective of risk, i.e. wherever there is a potential risk, insurance (for calamities and benefits) and lawyers provide vital counsel. As noted by others, your corporate form and disciplined follow-on are critical for both legal and tax reasons. Employee-related (contracts, employee handbooks-these are interpreted as contracts, fringe benefit administration, wages & hours of work, etc.) agreements between you and vendors and customers (read the back page of any purchase order), regulatory requirements (e.g. labels, product spec sheets, etc.), intellectual property should all have legal review in today's world. Suits are too easy to file and too expensive to defend. While you may be small today, with growth comes increased risk. Good habits at the beginning can prove to be lifesavers later on.
You should consider forming an entity and which type to form for your situation. You should consider assigning all intellectual property [IP] to the entity. You should consider having employment and independent contractor agreements in place with clause as to non-disclosure and non-compete and non-solicitation and assignment of IP. You should look into payroll providers, accountants, attorneys, and tax professionals. You should hire an employment attorney to draft your workplace policies. You should consider protecting your trademarks, trade dress, design patents, utility patents, and trade secrets via filing for protection in the U.S. and in other countries and via company policies as to who sees what for what purpose and via technological controls on data and create the ability to remotely wipe data if that is needed. Also you should manage your use of the cloud to minimize disruption risk and security risk and you should have a disaster recovery plan.
If you have a corporation or a LLC, you must maintain your corporate records such as having or creating annual minutes for the corporation shareholders and directors. For a LLC you should have an annual meeting of the Board of Managers if there is more than one and at least an annual meeting of the LLC Members, even if there is only one shareholder of the Corporation or member of the LLC. Otherwise the protection of the LLC or the corporation can be challenged.
Employee terms of employment. If employees are at-will employees then any written offer of employment should state that as should your employee hand book. An Employee Handbook is recommended when you have at least 10 employees and in MA if you have 5 or more. If you are treating some people as consultants you have to very careful as to the terms of any such agreement and the manner the consultant is used especially if they are not a corporation or LLC so they will not be deemed an employee or partner. Such letters and agreements should be reviewed or drafted by an attorney.
Insurance for a business will depend on the type you are engaged in, for instance if you have employees you will be required to carry workmen's compensation insurance, if you rent space you should have general liability insurance, if employees use their vehicles on company business you need to make sure you are covered if they are in an accident and your company is sued.
Then there is copyrights, trademarks for websites, names and logos. Use and design patents could be relevant as may be software patents.
Contracts for services or products and warranties, these should be reviewed by legal counsel as well as to limitation of liability. Then there are international trade issues so that you do not violate ITAR or other US Trade statutes. Other countries have their own requirements on import and export of products and services,
A detailed general guide would be at least a 100 pages long if it were to cover all the possible issues, but this short list is a good start.
Make sure you have an attorney review your agreements/contracts to ensure you have all your bases covered.
Simple and cheap advice can be acquired from insurance agents.
Other than that, if you go LLC/Inc. be sure to keep your obligate reporting up to date otherwise your "entity" may be useless as a protection to your personal assets. (I am not a lawyer - verify this statement!)
You really need to ask this of your business attorney. Different states have different rules. Plus you should only accept legal advice from a legal professional. You wouldn't go to a plumber to pull a tooth, would you?
To answer the question: yes, the type of business is one major area and needs the advice of your attorney and accountant as there are both legal and tax issues involved.
Contracts and agreements, conflict of interest, letters of agreement, employment agreements. termination letters, IP, copyrights, patents are all things you need to set up, depending upon your business.
Here are a few that I believe to apply to some industries worldwide: