The 4 Most Common Legal Problems for Businesses

business conceptWhile starting a business will provide people with an opportunity to become their own boss, tap into a passion and potentially enjoy a bigger income, entrepreneurship isn’t for the faint hearted.

After all, you will be required to constantly evolve your products and services, keep up-to-date with the latest marketing trends and consumer behaviour, and, of course, you’ll need to avoid various legal problems along the way.
If you’re kickstarting a venture and want to protect your brand at all costs, learn about the four most common legal problems for businesses.

1. An Incorrect Business Structure

Most entrepreneurs are deeply invested in developing a unique brand, providing the best product and improving the customer service experience. Consequently, they might fail to make an informed decision when choosing a business structure, only to realise their mistake many years down the line. As a result, they could face various legal complications for choosing the wrong structure, such as a:
– Sole proprietorship
– Partnership
– Limited partnership
– Corporation
– Limited liability company

It is, therefore, essential to consider your company’s needs and future growth before you make a decision.

2. Employee Compensation Claims

If an employee sustained an injury on your premises or became ill due to working for your business, they might embark on a compensation claim to receive a financial reward for their accident or illness.

It is, however, a legal requirement for most companies to obtain employer’s liability insurance to cover the cost of your company’s defence and the awarded compensation.

If you don’t have insurance, you could be fined £2,500 per day until you finally include adequate employee liability insurance into your operations. You can easily find suitable liability insurance tailored to your specific needs from reputable providers such as Hiscox, who can instantly cover your company with the relevant documentation.

3. Intellectual Property Disputes

Regardless of whether you are running a fashion boutique, web design agency or a healthcare clinic, you will develop a unique brand identity. For example, your logo, slogan and branding colours will become synonymous with your business, and they are intellectual property (IP) elements.

If you fail to protect your intellectual property, other companies will be free to pass them off as their own or to distribute your original content without your permission. Unfortunately, if you have failed to secure a copyright or trademark on your IP, an intellectual property dispute could take years to resolve and there is a chance you could lose your assets.

4. Poorly Drafted Business Contracts

Contracts can safeguard an agreement between your business and its partners, clients, or shareholders. However, if you have a poorly drafted business contract, it is possible you could face legal repercussions as a result, as a client or partner might believe you are in breach of contract.

To prevent this problem from arising, you must ensure a team of experienced legal professionals both draft and revise a contract prior to being signed by both parties.


While running a business can be rewarding, it is not without its challenges. If you want to avoid legal repercussions that could damage your finances and reputation, you must invest in the appropriate insurance for your venture, correctly draft business contracts, select the appropriate business structure and protect your brand’s intellectual property.

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