Small Business Legal Issues You’ll Likely Face

Legal issues can be tricky for new business owners to navigate. It’s like a minefield of potential liability and compliance.

There are a lot of legal considerations to be aware of. And it’s essential to get things right the first time, or you could find yourself in hot water with the law.

That’s why I’m here to help. I’ve been helping small businesses navigate the murky waters of legal compliance for almost a decade.

With this article, I’ll teach you how to stay in good standing with both federal and state laws, so you can focus on what really matters: growing your business.

Let’s dive in!

What are Legal Issues in Business?

Legal issues in business refer to the laws and regulations that all companies must abide by. 

By understanding the laws that apply to your business, you can ensure you comply with all relevant regulations — and avoid costly penalties. 

How Do You Identify a Legal Issue in Business?

Identifying legal issues in business requires careful research and analysis.

Here are some steps to consider: 

• Educate yourself on the federal, state, and local laws for your business.
• Conduct a legal audit of all existing contracts, policies, procedures, and operations.
• Research legal technology solutions that can help automate legal processes, manage risk and stay compliant
• Seek legal advice from a qualified professional.

Why Are Legal Issues Important in Business?

Legal issues are essential for businesses because they provide the legal and regulatory framework to protect a business’s rights and interests.

Not only are legal issues important in reducing legal risk, but they also help:

• foster trust between parties
• create clarity around legal requirements
• and ensure all parties involved understand their legal responsibilities. 

How Do You Tackle Legal Issues in Business?

Legal technology is a growing trend in legal issue management, as legal professionals use legal tech solutions to:

• streamline legal processes
• manage risk
• and stay compliant. 

Legal professionals can move away from manual legal practices and toward efficient legal strategies by utilizing legal tech tools.

According to Karyna Pukaniuk, an Experienced tax and corporate lawyer, legal tech pro, and Head of Legal at Lawrina:

“Legal technology is a game-changer for entrepreneurs. With legal tech, they can streamline processes, access valuable resources, stay compliant, and easily manage legal matters.

Business owners should use legal technology to save time, reduce costs, and mitigate risks. And more importantly, by using legal tech tools, entrepreneurs focus on growing their business rather than the fine print in a contract.”



And if you’re overwhelmed by so much legal jargon, don’t worry- Lawrina has your back with their upcoming webinar on legal tech for solopreneurs and small business owners.

Lawrina’s webinar is your chance to understand legal tech in 2023 and get advice from industry experts.

If this sounds like something you could use, register here! and join us in understanding how to tackle legal issues for small businesses. 

By leveraging legal technology solutions, businesses can ensure they are better equipped to tackle legal issues promptly — and stay ahead of the curve.

Common Legal Issues You’ll Face in Business

Legal issues in business can range from contracts to trademarks and patents to copyright infringement or tax issues.

We’ve rounded up the most common legal issues small businesses face and will give you some tips on how to avoid them.

Legal Issue: Business Partnership Issues

While having an extra set of hands to tackle projects and manage day-to-day tasks is excellent, legal issues can arise if the partnership agreement isn’t clear from the outset.

Common legal issues include: 

• Disputes over ownership or management rights
• Liability for debts and other legal obligations
• Not properly dissolving a Partnership
• Lack of legal documents to support your terms

Legal Remedy: Have a Strong Partnership Agreement

A strong partnership agreement can protect both parties in the case of legal issues and ensure any legal disputes are resolved swiftly and amicably.

A sound partnership agreement should include: 

• precise definitions of ownership stakes and responsibilities,
• detailed legal documents that protect both parties from legal liability,
• an exit plan for when the partnership comes to an end, and
• dispute resolution procedures in case of legal disputes.

Legal Issue: Getting Sued by a Customer

Any legal issue that involves a customer is a legal issue worth taking seriously.

Legal issues such as:

• breach of contract
• negligence
• and providing faulty services

Can lead to legal action from customers, which could cost your business dearly. 

Legal Remedy: Have a Strong Attorney

To give yourself the strongest chance of success when getting sued by a customer, we recommend you find a strong attorney.

A strong attorney will:

• have legal experience in similar cases,
• advise on the legal risks and legal options available to you, and
• work with you to build a legal strategy tailored to your needs.

If you need a lawyer’s assistance and aren’t sure where to look, you can turn to Lawrina Match, which offers advanced search tools and even helps you determine what type of lawyer you need.

Legal Issue: Paying Quarterly Taxes

Not only can a legal disaster accompany not paying any taxes, let alone quarterly ones, but paying the right amount of money to the IRS on time is crucial.

Failure to pay exactly what you owe, when you owe it, can land you in legal hot water.

Legal Remedy: Hire a Great Accountant

Hiring a great accountant is an excellent way to ensure you pay everything on time and in full.

A good accountant will:

• File your returns accurately
• Advise you on minimizing legal risks associated with paying taxes, such as filing late or not filing.
• Help manage the legal documents required to pay taxes.

Legal Issue: Intellectual Property Issues

Employees of a small business who create original works that contain material subject to intellectual property laws, such as copyrights and patents, can bring legal issues if proper legal documents aren’t in place.



Legal Remedy: Draft a Great Employee Contract

You should have a strong employment contract to clearly define who owns the rights to any work created while employed by your business.

If you need high-quality employee contracts, we recommend Loio — a document drafting and reviewing software powered by artificial intelligence. 

Legal Issue: Insurance Issues & the State

This legal issue arises when a business does not meet the legal requirements for insurance set by its state.

For example, legal issues can follow if a business doesn’t have workers’ compensation insurance or liability insurance.

Legal Remedy: Make Sure You Understand the Types of Insurance Your Business Needs

To avoid legal issues related to insurance, business owners must understand the legal requirements of their state.

Ensure you understand what type of insurance your business needs, and check in with a legal professional if you have any questions.

Legal Issue: Non-Disclosure Agreements with Clients

When dealing with clients, legal issues can arise if private information isn’t kept confidential. 

Non-disclosure agreements are essential legal documents that should be signed between a business and its client to protect any proprietary information shared during their relationship.

Legal Remedy: Have a Boilerplate NDA



A boilerplate NDA is a legal document template you can use when entering into client contracts.

These legal documents protect your business and its client from legal issues related to sharing confidential information.

To create high-quality legal forms quickly and easily, we recommend  Lawrina Templates. All Lawrina legal templates are professionally designed by lawyers and easy to customize.

Legal Issue: Accounts Payable and Recovery

Accounting legal issues are a thorn in the sides of many businesses.

Whether due to inefficient processes or unexpected bills, one thing’s for sure: legal issues with accounts payable (AP) can really put a damper on an otherwise thriving business.

Legal Remedy: Debt Recovery and Debt Control

Take advantage of legal technology to protect your business from legal issues related to accounts payable. 

Debt recovery and debt control tools help you manage payments quickly and efficiently so that legal issues don’t arise.

These legal tech solutions provide essential legal documents, such as invoices and receipts, for all your financial transactions. 

Wrapping Things Up

To sum it up, we’ll end with this quote from Colin Levy, a legal tech consultant and director of Legal and Evangelist at Malbek: 

“Technology is helping make understanding and interacting with the legal system easier, faster, and simpler. Through tools like legal research tools and document automation, entrepreneurs now can get the information they need as well as the documents they need to create to do business with clients cheaper and faster than before.

As an entrepreneur, your time is valuable and scarce. Using technological tools to automate routine yet time-consuming tasks such as creating documents or intaking new clients can free up time better spent on more valuable tasks.”

Indeed, legal technology can help you protect your business from legal issues by providing the legal documents and processes you need to operate efficiently.

Now we’d like to hear from you; what legal issues have you faced in your business, and how did you resolve them? Let us know in the comments below.

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