Contrary to popular belief, some of the most successful businesses can be undermined by lackadaisical legal arrangements. Furthermore, the threat of lawsuits and other problems also come back to haunt them at the worst possible moment. To reduce the chances of these issues from occurring, be sure to follow these tips.
Doing business with friends and family is a common practice for small business owners. However, these relationships can potentially cause a conflict of interests to an extent. All owners of a business should keep in mind that agreeing on certain issues such as each partner’s time and capital commitment, how capital will be shared as it comes in, and how ownership will be redistributed if a partner were to leave the business. Javier Loya, CEO and Founder of OTC Global Holdings, states “Before you sign any agreement, be sure to run through a variety of scenarios in your head. Evaluate how the agreement will affect every individual and be sure that all interests are protected.”
Whether you are hiring an in-law or a total stranger, it’s always important to implement an employment agreement. This document will set forth expectations and rules for each person to follow. This agreement should also be sure that each employee’s working status is at will, meaning that they might quit or be terminated at any time if perspectives do not align, or other problematic issues arise. Loya added: “At OTC Global Holdings, we had our attorneys draft standard employment agreements. This something all companies should do.”
Every business must also document all of its formal activities, which include firing, income reception, and expenditures. By maintaining the right documents, you won’t have to deal with stumbling into problems with future investors or buyers.