When my clients aren’t as lucky, they’re coming to me because they’re faced with a situation that has gone from manageable to litigious. Here are five things that I wish business owners understood to safeguard themselves and spend less time worrying about legal problems so that they can concentrate on running their business.
When my clients aren’t as lucky, they’re coming to me because they’re faced with a situation that has gone from manageable to litigious.
1. A Bad Contract May Be Worse than No Contract
I’ve repeatedly had customers come in with contracts which are inappropriate for the circumstance. By way of instance, the contract may be for a permit to a site instead of possession of it — something which may be a significant issue if you would like to transfer the site to another provider. Other contracts may contain insurance clauses with limitations that are too costly to find, if not impossible. Inappropriate contracts might end up costing more in court costs since you’re litigating issues that you don’t need to or because terms that actually ought to be in them are missing.
When you’re signing a contract, then you will need to be certain the contract is appropriate for the circumstance. If you do not know that terms and conditions of the contract, then you will need to ensure that you are educated on them until you sign it.
2. Read Contracts and Records before You Sign Them
I am always surprised by how many people sign contracts without reading them, much less understanding them. You want to read every contract that you sign for your company. When it is to rent a copier for a year, to have a site developed, or just your tax return, you would like to read and comprehend it. You also need to make note of any word which you might need to remember.
Does that copier lease have a deadline you must terminate by so that it does not automatically renew for another year? If this is the case, you want to generate a calendar reminder to make sure that in the event you would like to cancel, you still can. Does the services arrangement for this site have payment provisions in it that should be complied with in order for the service to avoid being placed on hold?
Regarding understanding contracts, even if you do not understand the contract, do not sign it until you do. You might be getting to a triple net lease which costs twice more than you expected monthly, just because you do not know how a triple net lease functions.
Do not forget it will be not as embarrassing to spend the time to learn what a triple net lease means, than to default on a rental because you didn’t want to seem ignorant. If you’re selling items online and you’ve got something about European Union law compliance on your terms of usage, you will need to be certain that you understand what you are agreeing to comply with. Ignorance is no excuse as soon as you’ve entered into a contract for not complying with its provisions.
3. If It Sounds Too Good to Be True, It Probably Is
For those who have someone request to invest in your company and the terms are absolutely fabulous, unless it’s your mother, it’s most likely too good to be true. Finding a site remade for $5,000.00 when the next nearest bids were at the $10,000.00-$15,000.00 range? I would think about betting money your $5,000.00 website is not going to be exactly what you anticipated, particularly if you believed it would be just like the other bids. In rare instances, you might have the ability to find a deal.
Nevertheless, most deals usually include fine print. A pupil may charge you a lower speed to design your logo because he needs something to get a portfolio. However, it might take much more than if you hired a skilled or might not get done whatsoever. You should always carefully evaluate what you’re paying and what you are realistically likely to get.
4. Know Your Finances
After a couple of years in business, you might not manage the financing for your organization on a daily basis like you did when you first began. However, you will need to be sure you keep current on what they are, at least monthly. Regrettably, embezzlement does happen. If you do not know what’s coming in and going out of your organization, you can not know if a person is doing something nefarious with your cash.
If you do not know what’s coming in and going out of your organization, you can not know if a person is doing something nefarious with your cash.
Although ideally your tax professionals are capable; things do get overlooked and tiny changes can make a huge effect on your bottom line. If you hire a worker in a new state, you may be asked to begin collecting sales tax from online sales to individuals in that nation. If your CPA was not advised that you hired this new person, you might face fines and penalties from the new state for non-collection. Raising prices by many cents on your top products can generate thousands more annually. Knowing your financing makes you a more successful business owner.
5. Advice Is Only as Good as What You Pay for It
Last, your information (and contracts) is generally just as good as what you pay for. I’ve had countless times when prospective customers come in with contracts they have downloaded online, both for free and for minimal fees from paid sites, or that they’ve pieced together from contracts they had from former workers or competing companies. Sometimes, they’re lucky that there are just a few terms that are not in their favor. Typically, the results can cost tens of thousands of dollars.
When using former companies’ contracts or your competitor’s contract, you might have problems beyond having a bad contract. Unless the company had the contract professionally written, you might use a contract which is not going to protect you. Worse, in case you’ve got a confidentiality or other kind of intellectual property agreement with your former employer, using its contract as your own, even with modifications, you may be in breach of your agreement with the business.
In general, I tell my customers that getting expert advice, whether from a lawyer for legal problems, a CPA for accounting issues, or perhaps a marketing person for branding advice, to start with, may appear costly. But it can save you hundreds, if not thousands, of dollars in the long term.
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