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5 Legal Hurdles Your Small Business May Encounter


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A business’s first few months are critical to its survival. Any hurdle faced at this period could prove to be the stumbling block of your startup. It is therefore not an overstatement that being prepared will work wonders in the long run for your business.

Most entrepreneurs don’t have natural legal knowledge when starting the business. Nevertheless, as the saying goes ignorance is no defense of the law, knowing the following things will save you lots of headaches and a tidy sum of money:

Business structure.

Having an understanding of the different forms of business structures such as partnerships, sole proprietorships, incorporated companies and limited partnerships is important. An analysis of the different risks and benefits associated with each business model should be done. You are also able to know the financial and tax requirements for every model. The analysis of all the factors is done and a suitable business model is chosen. Setting out the terms of the ownership or partnership can now be done ensuring your business is safe in the long run.


Pitfalls in the business world do not come bigger than licensing. As a business person, it is integral that you know what licenses are required for the business you set out to do. A look through your city’s by-laws and regulations will help you. It is also important that you seek out information from other entrepreneurs in the same field. Lack of proper licensing has led to indefinite shutdowns of operations by requisite inspectorate departments. Fines could be hefty once you are caught without a proper license. It wouldn’t be an understatement saying you should look through this with a toothcomb to protect yourself and the business.


Seeing as your company will have interactions with various groups of people contracts are an important tool. A contract ensures that not only does the other party uphold their end but you also do. A keen perusal of the contract should be done once a contract is drawn. In the business world it not unheard of to have companies going bust, because the owners were not keen enough during the drawing of the contract. As the saying goes the devil is in the details, mischievous suppliers or buyers may put in terms of the contract, that end up hurting you massively in the end.

Employment laws.

Workers and employees are meant to make your work easier for you. However, you have to be careful in how you handle them. Employment laws are becoming more and more stringent on unscrupulous employers, that impose unfair terms on their workers. Issues such as compensation, overtime, benefits, hiring and firing, and safety need to be handled with the utmost adherence to the relevant laws. Failure to handle them properly may leave you in financial ruin.

Tax regulations.

Every small saving in a small business goes a long way towards its growth. As you save it should, however, be a cautionary tale to you that failure to pay taxes could land you in jail for a long time. Taxes are the backbone of most economies and therefore the authorities are very aggressive in apprehending errant citizens. Taxes such as income taxes, employee taxes should always be paid up to date. Your business’ survival is truly dependent on this adhere to the regulations.


While these are not all the pitfalls your business could experience they are the major ones and careful adherence should be paid to them.