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Legal Challenges Facing Small Businesses

On Behalf of | Feb 6, 2024 | Business Law

Operating a small business is an exciting venture that is often met with legal challenges. Such challenges can range from minor legal and industry compliance issues to more significant disputes, which can ultimately impact a business’s ability to function correctly.

Understanding the legal issues that may arise for small business owners is crucial for prevention and effective management. This knowledge can help to safeguard a business and foster long-term success.

Determining Legal Structure

Upon formation of the business, owners must first decide the appropriate business structure for their company. When choosing between a sole proprietorship, partnership, limited liability company or corporation, it is important for owners to take into consideration the different legal implications and protections offered by each corporate structure. These implications may pertain to ownership protections, ownership benefits/risks, corporate liability, taxes, or record-keeping requirements. A business owner’s ability to facilitate their entrepreneurial vision, while protecting their personal assets, ultimately rests upon this decision. Thus, it is important that a business owner retains an attorney who can ensure the most suitable model is selected for their particular personal and business needs.

Compliance with Federal and State Laws and Regulations

Small businesses must adhere to a plethora of federal- and state-mandated laws and regulations. These can range from employment laws, such as minimum wage requirements and anti-discrimination policies, to industry-specific laws and regulations. If found not in compliance with such laws and regulations, business owners can face hefty fines, legal disputes, and damage to their business’s reputation. To ensure a business owner avoids such harms, they should seek the assistance of a legal professional. From reviewing policies and procedures to providing insight into new laws and regulations, a lawyer can help small business owners stay informed and compliant.

Employment-Related Challenges

Among the most common legal issues that small businesses face are employment disputes. These include managing employee contracts, ensuring fair labor practices, and handling terminations and/or layoffs. Mishandling these situations can lead to lengthy and expensive legal disputes, such as wrongful termination lawsuits, creating financial and reputational damage to the business, not to mention significant strain to ownership Legal professionals can assist in managing these types of situations by reviewing employment contracts and providing subsequent guidance in the event that a dispute does arise.



Intellectual Property Protection

Protecting one’s intellectual property is also crucial for small businesses, and particularly for those businesses within innovative or creative industries. Such protections may involve securing patents, trademarks, and copyrights, or protecting business ideas, products, and brand identity from infringement. Failure to take proper action in guarding these elements of a small business can result in significant financial losses and competitive disadvantages. Fortunately, an attorney can advise a small business owner on the governing laws in this area, helping to avoid such losses.

Contract Management and Disputes

Small businesses frequently enter into a variety of contracts with vendors, customers, and partners. Up-to-date contracts are crucial in avoiding any misunderstandings and subsequent legal disputes. Thus, it is important that such agreements are well-drafted, so that a business’s resources and focus do not become strained. Retaining legal counsel can ensure that the contracts pertaining to one’s business are current and comprehensive, in order to protect the business.

Ultimately, small business owners will inevitably face a range of legal issues. Legal support can be critical in navigating these matters, while providing owners with the strategic and emotional support they will need to stay successful. Arnett Law Group, LLC offers a variety of services to cater to the needs of a small business. Our legal team is dedicated to helping small business owners expand their businesses, while ensuring compliance with applicable laws and regulations. For more information, contact us at (312) 561-5660 or visit our website at

February 6, 2024


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