Top Business Tips from a Lawyer: What Every Entrepreneur Should Know

Starting or running a business is exciting, but let’s be honest—legal stuff can feel like a headache. As a lawyer (or someone who has spent way too much time with them), I’ve seen plenty of business owners make simple legal mistakes that cost them time, money, and sometimes even their entire company.

To help you avoid those pitfalls, here are some must-know business tips from a legal perspective. Trust me, these can save you from serious trouble down the road.

1. Choose the Right Business Structure

One of the first decisions you’ll make is how to legally structure your business. Your choice affects taxes, liability, and even how you can raise money.

✔ Sole Proprietorship – Easiest to set up, but you’re personally liable for debts.
✔ LLC (Limited Liability Company) – Protects your personal assets and is great for small businesses.
✔ Corporation (C-Corp or S-Corp) – Best for large businesses or those seeking investors.
✔ Partnership – Good if you have co-founders, but make sure you have a solid partnership agreement.

💡 Tip: If you’re unsure, start with an LLC—it offers flexibility and legal protection.

2. Get Everything in Writing (Yes, Everything!)

Verbal agreements might work between friends, but in business? Not a chance. A handshake deal won’t hold up in court.

✔ Always use contracts for partnerships, vendors, employees, and clients.
✔ Spell out payment terms, deadlines, and dispute resolution to avoid confusion.
✔ Even small agreements (like a freelancer hiring a designer) should be in writing.

💡 Tip: If you don’t have a lawyer, use a contract template from a trusted source—but never copy one blindly without reviewing it.

3. Protect Your Intellectual Property (IP) Early

I’ve seen businesses lose their brand names or get sued because they didn’t protect their intellectual property. Don’t let this happen to you.

✔ Trademarks – Register your business name, logo, and slogan.
✔ Copyrights – Protect original content (like blogs, photos, and videos).
✔ Patents – If you invent something unique, patent it before someone else does.
✔ NDAs (Non-Disclosure Agreements) – Use them when sharing business secrets with employees or partners.

💡 Tip: Before choosing a business name, check if the domain name and social media handles are available.

4. Separate Business & Personal Finances

Mixing business and personal money is a major red flag—it can make you personally liable for business debts (even with an LLC).

✔ Open a business bank account and use it for all transactions.
✔ Get a business credit card for expenses.
✔ Pay yourself a salary instead of withdrawing random amounts.

💡 Tip: Keeping finances separate also makes tax season way easier!

5. Understand Employment Laws Before Hiring

Hiring employees? Congrats! But be warned: employment laws are strict, and mistakes can lead to lawsuits.

✔ Use clear employment contracts outlining job roles, pay, and expectations.
✔ Follow wage and hour laws—overtime violations can be costly.
✔ Know the difference between an employee and an independent contractor (misclassifying can lead to fines).

💡 Tip: Have an employee handbook to outline company policies—this prevents legal issues later.

6. Pay Your Taxes (and Keep Good Records)

Ignoring taxes is like ignoring a ticking time bomb—it’ll blow up in your face eventually.

✔ Get an EIN (Employer Identification Number) from the IRS.
✔ Keep detailed financial records (income, expenses, receipts).
✔ Know what taxes apply to you—income tax, sales tax, payroll tax, etc.

💡 Tip: Work with a good accountant to avoid tax penalties and maximize deductions.

7. Have a Plan for Disputes & Lawsuits

Even if you do everything right, legal disputes happen. Employees quit, clients don’t pay, and contracts get broken.

✔ Include dispute resolution clauses in contracts to avoid court battles.
✔ Keep written records of all business transactions—emails, invoices, and signed agreements.
✔ If a lawsuit happens, consult a lawyer before responding.

💡 Tip: Mediation or arbitration can resolve disputes faster and cheaper than going to court.

8. Get Business Insurance

A single lawsuit, accident, or disaster could wipe out your business if you’re not insured.

✔ General Liability Insurance – Covers accidents and injuries on your premises.
✔ Professional Liability Insurance – Protects against negligence claims (great for consultants and service providers).
✔ Cybersecurity Insurance – Covers data breaches and online threats.
✔ Workers’ Compensation Insurance – Required if you have employees.

💡 Tip: Even home-based businesses need insurance—your homeowner’s policy won’t cover business-related losses.

9. Know the Rules for Marketing & Advertising

Marketing is essential, but false advertising, spam, or privacy violations can land you in legal trouble.

✔ Don’t make false claims about products or services.
✔ Follow email marketing laws (CAN-SPAM Act in the U.S.).
✔ Get permission before using customer reviews or testimonials.

💡 Tip: If you collect customer data, have a privacy policy that explains how you use it.

10. Have an Exit Strategy (Even If You’re Just Starting)

Most business owners don’t think about what happens when they leave the company, but you should.

✔ If you have co-founders, create a buy-sell agreement (what happens if someone leaves?).
✔ Plan for succession—will you sell the business, pass it to family, or close it?
✔ Keep financial records clean to make selling easier if needed.

💡 Tip: Thinking about an exit strategy early makes your business more valuable to investors.

Final Thoughts

Legal issues might not be the most exciting part of running a business, but handling them correctly can save you from huge problems down the road.

If you’re just starting out, talk to a business lawyer for advice specific to your industry. Trust me—paying for good legal help now is way cheaper than dealing with lawsuits later.

Got legal questions about your business? Drop a comment below, and I’ll help as much as I can! 🚀