Running a business is like playing whack-a-mole: Every time you solve one problem, another pops up. For some, a more apt comparison might be strolling through a dog park without watching your step. There are plenty of troublesome areas to step in, and cleanup is messy. The trick is to watch where you’re going and enlist help. Though I often hear business owners say, with relief, “I’ve never needed an attorney,” it’s wise to involve an attorney who can take proactive steps to protect the company. A reactive approach to trouble is always more time-consuming and expensive.
Do you rent commercial space? Have you read every word of your lease agreement? Do you know whether you’re responsible for replacing the HVAC unit if it goes kaput?
Most of the time, the landlord will provide the draft of the lease for the tenant to sign. Naturally, the lease language will heavily favor the landlord. Often, the property management company representing the landlord will hastily send a template lease agreement that may or may not even describe the specific space you’re looking to lease. That’s why it’s important to have an attorney review your lease and help you negotiate terms. One client signed a lease agreement for a different, much larger space next door to the one it occupied, resulting in thousands of dollars in extra rent.
Do you have employees or independent contractors? Employee issues are among the most infuriating for business owners. Employees who are terminated for cause are denied unemployment benefits. Many file retaliatory wage claims with the state, insisting the employer failed to pay them for hours worked. Even when the wage claim is baseless, the burden falls on the employer to disprove the claims. Business owners who have endured this process learn quickly that documentation is crucial.
Do you have a partner? While many friends and family members who go into business together shrug off the need for an owners’ agreement “because we’re friends,” no relationship is impervious to troubles.
Do you have insurance? Be sure you (or your attorney) have read and understand your entire policy, especially the exclusions.
Are you operating as a sole proprietor? Do you prefer Tums or Maalox for your ulcers?
The same rules and regulations that apply to a company with 500 employees apply to one whose owner is chief cook and bottle washer. The primary difference is the large company has the resources to dedicate employees to compliance efforts. A small-business owner, especially a sole owner, has only a small fraction of one person to dedicate to these concerns, which is why many business owners make a bad step in the dog park, because of issues they didn’t foresee, either because they weren’t aware of the risk or because they saw it and still stepped in it.
Gina Bongiovi is managing partner and corporate consigliere at Bongiovi Law Firm.