What you don’t know CAN hurt you

You’re a small business owner or independent contractor.  You work hard, start early, leave late, work weekends more often than you’d care to.  You skip workouts, pull all-nighters when necessary, and leave family reunions a day early to “take care of business.”  You go the extra mile (or two, or six, or ten) for your partners, your customers, your team, your kids, your family’s financial future.  One particularly hectic evening, about five minutes after you walk in the door, a process server shows up with a court summons or subpoena.  Or worse, you get a letter in the mail that states you and your business are under a “civil investigation” by state or federal authorities.  What went wrong?

Unfortunately, any business owner faces exposure and a higher risk of being sued than a non-owner or employee.  Common legal misconceptions abound, and what you don’t know CAN hurt you.  For example, you may think that your home-based business, which is all phone and computer driven, doesn’t violate local zoning ordinances.  However, did you know that most residential communities do regulate home-based business activities of certain types (like selling retail products from your house or using more of your home’s square footage for business than residential living), even if your business doesn’t involve noisy delivery trucks or heavy equipment.  Another common, and dangerous, misconception is the popular notion that forming an LLC makes your personal assets “bullet proof” even if the business tanks.  Beware:  LLC’s do NOT have magical powers.  It’s also wise to steer clear of downloadable forms in forming or changing your LLC and instead to ask for guidance from a real lawyer familiar with Arizona’s quirky LLC laws.

The more your business grows, the more laws and regulations come into play.  In Arizona, having even one employee means YOU HAVE TO participate in the e-Verify program.  Having 15 employees or more means you have to pay attention to Equal Employment Opportunity requirements in hiring, promoting, and firing workers.  Spending a few hundred dollars to make sure you have your employment issues squared away is way less expensive than paying years’ worth of back taxes to the I.R.S., being investigated or prosecuted by state immigration and employment verification requirements, or paying thousands in fines from federal regulators.

The bottom line, you can’t avoid problems until you know what to avoid and how.  Litigation is emotionally and financially draining, it takes months to resolve simple claims. Don’t wait until you’re forced to call a lawyer, or to close up shop for days or weeks.  If you have a business, you need to have a good business lawyer on speed-dial.  Next time you find yourself uncertain about a legal issue, don’t Google it, ask a real lawyer who’s familiar with the quirks of Arizona law.  Don’t guess.  Get the straight scoop on what your rights and liabilities really are.   What you don’t know CAN hurt you.


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