By Kelly Bagla, Esq.

Most entrepreneurs do not have a team of lawyers to help advise on all business-related issues until it’s too late. Just as entrepreneurs need to know the basics of accounting and marketing, they also need to understand the basics of business law to avoid the potential failure that follows costly litigation.

As a lawyer and an entrepreneur, I have experienced the struggles of business on both sides. Most entrepreneurs do not have legal experience so they end up making big decisions that could lead to big legal ramifications. You do not need to go to law school to be a successful entrepreneur, but you do need to learn the essentials, so you make the right decisions.

Here are three laws every entrepreneur should know:

VICARIOUS LIABILITY

Most business owners understand they are responsible when their employees cause harm to themselves or others while on company property, but the truth is that you can be liable for harm caused by an employee anywhere at any time if that employee caused harm within the course and scope of the employee’s job duties. As an example, if you ask an employee to drop something off at the post office on the way home, and the employee causes an accident en route, even if the employee was driving their own vehicle, you could be liable for damages. This is a common situation, but it is one that could have major consequence for your business.

To avoid finding yourself on the wrong end of a vicarious liability summons, define your employee’s job descriptions clearly and purchase a commercial general liability insurance policy that covers employees at work and in personal vehicles (also known as non-owned auto coverage).

OVERTIME RULES

Most people know that putting in more than 40 hours per week equates to working overtime, but it is important to remember that certain salaried employees are entitled to overtime pay. Some employers attempt to avoid overtime entirely by classifying employees as independent contractors. Not only is this illegal, you are opening yourself up for violations of wage and hour laws. Make sure you classify your employees properly.

If you have non-exempt employees working overtime, including off the clock work, pay them for that time and make sure your payroll administrators are up to date on current wage and hour laws. Although it might feel expensive now, doing so will save avoidable litigation costs down the line.

PATENTS, COPYRIGHTS, AND TRADEMARKS

You might have the perfect product, logo, website photo, and company name, but if any of those constitute someone else’s intellectual property, you will have to pay for using them without permission. Intellectual property law covers patents, which protect inventions; copyrights, which protect artistic creations; and trademarks, which protect brands. Violations for infringing intellectual property rights range from crippling monetary penalties to injunctions, both of which can be fatal to your business.

Before you sell that product, or choose that logo, and use that photo on your website, you should conduct a thorough search to make absolutely sure that you are not infringing upon someone else’s intellectual property. You can and should pay for a license to use a logo or photo or purchase them outright, which would give you the legal rights to use those items without infringing on intellectual property rights.

To run a successful business, you do not need to go to law school, but you do need to be prepared for common legal situations. Extended expensive litigation can drag down even the most promising businesses; therefore, educate yourself on relevant laws to avoid business losses.

As a fellow entrepreneur, I have authored six books that educate and support business owners in starting, running, and growing a business. In particular, Legal Pearls, Pearls of Wisdom for Avoiding Business Litigation, is useful in avoiding costly lawsuits and legal troubles. Becoming a business owner, you control your own destiny, choose the people you work with, reap big rewards, challenge yourself, give back to the community, and you get to follow your passion. Knowing what you’re getting into is smart business because the responsibility of protecting yourself and your family falls on you.

For more information on how to legally start and grow your business please visit my website at www.BaglaLaw.com

Disclaimer: This information is made available by Bagla Law Firm, APC for educational purposes only as well as to give you general information and a general understanding of the law, and not to provide specific legal advice. This information should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.