5 Most Unexpected Legal Issues Businesses Can Face


Navigating the world of business is, undeniably, one of the very complex fields with complicated processes that every marketer must go through in the course of building a successful development. For instance, numerous inevitable challenges and issues will vex any businessman through his/her executive journey, that include: taxes, product development, resource management, competition, and – probably one of the most concerning of all – legal and regulatory issues, which, inconvenient as they may be, are part and parcel of running and making a thriving company.

Regardless of the date and no matter how tumultuous and unpredictable experts say the year would be, any business – whether big or small – will face legal issues at some point. And in whichever aspect, these legal headaches can take one by surprise and cause severe damage to the business’ bottom line. Therefore, it is extremely critical for business owners to focus and take into consideration the threats of crippling litigation and make them on top of the priorities.

In order to do this, one must learn to anticipate, prevent, and tackle not only the common legal concerns but, most importantly – the unexpected ones (which often times marketers tend to ignore) even before they arise.

So, what are the most unexpected legal issues marketers should be concerned about? Here is a rundown.

  1. Business Structure

One very common mistake that marketers make is jumping straight into setting up a company without considering (or even knowing) the importance of choosing the right business structure that best fits the business.

And while this may be a common error, its effects still surprises many.

Choosing the right business structure has a direct effect on the business’ taxes, potential to earn profits, and personal liability. Depending on one’s risk-tolerance (i.e., asset protection) and demand for complexity, the choice will have a long-lasting effect, which includes its own advantages and disadvantages.

Therefore, consulting a qualified business attorney is marketer’s smart option to get it right, avoid losing everything, and keep a number of legal consequences at bay.

  1. Trademark and brand names

Entrepreneurs will agree that choosing that “perfect” name is an exciting part of starting a business or launching products. After all, a “perfect” trademark and/or brand name is an extension of a business that reflects both the owner and the company’s image and relays the message to the target audience – ONLY, if done properly.

Unfortunately, according to Timothy Schmidt and Firas Kittaneh of Young Entrepreneur Council (YEC) – an invite-only organization comprised of the world’s most promising young entrepreneurs – trademark and brand names are two of the legal issues that most entrepreneurs do not give utmost importance upon starting businesses.

In addition to this, Susan Gunelius pointed out in her Forbes article that, “Today, trademark misuse that could damage a brand’s reputation is still rampant. After all, trademark misuse doesn’t only hurt the company that owns the brand and its intellectual property assets. It also hurts consumers.”

A “perfect” name is not yet perfect if it is someone else’s perfect name. So, before getting those business cards printed up, Schmidt recommends performing a knockout search (to check whether the name is available elsewhere) and making a few hundred-dollar investments with an Intellectual Property lawyer to save the business from realizing major mistakes down the road – like the costly rebranding process and most importantly, trademark infringement and lawsuits.

  1. Accounting and Finance

Accounting and finance, in business, are often regarded as the boring stuff that most entrepreneurs (as Patrick Vlaskovits of YEC said) do not give enough time and attention to – which, clearly, is a mistake as they play an essential role in business management.

The accounting and bookkeeping infrastructure, when in its proper place, could give the company several practical advantages – such as analyzing the company’s performance and creating budgets that could help in making decisions in maintaining and growing the business.

On the other hand, poor accounting practices could render a number of legal issues. Its sloppiness could cause a lot of minor details (which could actually be properly handled easily with a modicum of care and the right software) to be overlooked – like paying the right amount of taxes, complying with the safety laws; and if ever faced under legal scrutiny (which normally happens to any business), poor financial records could create and worsen unnecessary troubles.

  1. Non-Disclosure Agreements

Whether neglected or forgotten, a lot of companies (especially the new ones) seem to disregard Non-Disclosure Agreements (NDA) when “trying” to protect proprietary information “often because of an aversion to spending money on legal fees” or because of the thought that what is supposed to be “top secrets” should not be talked about.

But when protecting a company’s information, any entrepreneur must remember the critical importance of having the good practice of getting everyone that is engaged in the business (whether suspected they would run and tell the competition or not) to sign the contracts.

At the end of the day, the fees associated with preparing agreements is nothing compared to the cost of lost information and/or litigation to remedy the damages.

  1. Divorce and Dividing Assets

Divorce is probably the most unexpected legal issue a business will come across at some point. For everyone involved, it is always difficult this why you need to hire a family law attorney in Katy. However, when one or both spouses own the business, it can become much more arduous – especially that there is a possibility that while nurturing and growing the business together, one might have unwittingly done things that could potentially put the business at risk in the event of a future divorce.

Parting ways are quite challenging especially if there are significant assets (i.e., houses, brokerage accounts, retirement plans, etc.) involved. Furthermore, if the divorce is contentious, it can get even more complicated when deciding who should get what. However, if both parties agree, they can start filing a quitclaim deed to remove one who no longer wishes to be part of the business.

Divorce financial strategist, Jeff Landers, said that in order to divide assets the right way – both spouses must, first, know the difference between Separate and Marital Property along with all the legal concerns associated with it (i.e., the state the spouses are residing in, debts, etc.) and why they are important. This could be fixed by hiring a professional lawyer to ensure that the process is done in a proper, fair, and legal way.

But why go through the hassle of business divorce when one can avoid it? One viable option that would come in handy is signing a prenuptial agreement (also called “prenup”) – a written contract made by a couple before getting married concerning the ownership of their respective assets should the marriage fail. In other words, although the possibility of divorce is not anticipated, it is better to be prepared.