Five Legal Missteps that Could Sink Your New Jersey Small Business
May 25, 2018
There Are Many Ways To Help Ensure That Your New Jersey Small Business Succeeds…
Small businesses play a vital role in the New Jersey economy. In conjunction with National Small Business Week, the Small Business Administration (SBA) recently published updated small business profiles for each state. In New Jersey in 2015, small businesses employed 1.8 million people or nearly half of the private workforce. Firms with fewer than 100 employees accounted for the largest share of small business employment.
Unfortunately, the SBA profile for New Jersey also reveals that for every newly-created New Jersey startup, another small business closes. In the third quarter of 2016, 6,199 new establishments were created, generating 25,490 new jobs in New Jersey. During the same period, 6,320 establishments exited resulting in 21,603 jobs lost.
Legal Protections for Your NJ Small Business
There are many ways to help ensure that your small business succeeds. While certainly not the most flashy or exciting, legal compliance is one of them. For New Jersey startups and other small businesses, even small regulatory fines or legal judgments can spell doom. Accordingly, it pays to devote time and resources to reducing your legal risks. Below are a few key tips:
- Do your research: Whether its leasing warehouse space or hiring a new vendor, always look before you leap. In most cases, that means conducting due diligence before agreeing to anything. It is always easier to walk away from a deal before you sign on the dotted line. Small business should also investigate the potential regulatory implications of any business decision, i.e. does hiring five new employees subject your business to additional labor laws, or what corporate filings are needed to expand your business into a neighboring state?
- Put everything in writing: From agreements with your business partners to contracts with suppliers, always execute a written contract. While it may be uncomfortable to ask a friend or family member to sign a legal agreement when they are helping get your company off the ground, the awkwardness is much greater should a serious misunderstanding arise down the road. Having your agreements memorialized in writing helps ensure that all the parties understand their rights and obligations and establishes a means for resolving any disputes.
- Formalize your employment practices: Your workers can make or break your business. To maintain a healthy and happy workplace, everyone needs to be on the same page. All small businesses should have formal human resources procedures in place, as well as a written employee handbook. Having established rules for everyone to follow helps workers understand your expectations and reduces the risks of an employment lawsuit.
- Protect your intellectual property: Many small businesses focus exclusively on protecting the assets that they can see right in front of them, such as product inventory or office buildings. It is equally important to safeguard your intangible intellectual property, such as logos and inventions. The time and effort needed to obtain trademark registration for company logos or secure your trade secrets via nondisclosure agreements almost always outweighs the costs of someone stealing it out from under you.
- Create a team of experts: Small business owners can’t wear all the hats needed to successfully run a company. It is important to know when to call in the experts, whether you need accounting help, legal advice, or marketing input. Having a team of knowledgeable professionals on call not only lessons the burden on entrepreneurs but also helps ensure that you make the right decision the first time around.
If you have any questions, contact us
New Jersey small businesses will often benefit from working with an experienced business attorney. If you have any questions or if you would like to discuss the matter further, please contact me, Jeffrey Cassin, or the Scarinci Hollenbeck attorney with whom you work at 201-806-3364.