5 Things NOT to Do as a Small Business Owner

Starting a small business can be a daunting task, but it’s important to remember that there are certain things you should avoid doing to ensure your success.

As a business lawyer and the CEO and managing partner at Apple Payne Law in Kernersville, North Carolina, I have seen many small business owners make mistakes that could have been easily avoided.

In this blog post, I will share with you five things not to do as a business owner in North Carolina.

1. Don’t Run as a Sole Proprietorship

One of the biggest mistakes small business owners can make is running their business as a sole proprietorship. This means that all liability, including lawsuits, falls on the individual rather than the business itself.

If someone were to sue your business, your personal assets, such as your bank accounts and home, could also be at risk. It’s important to set up your business as an LLC or corporation to protect yourself and your family from potential legal issues.

2. Don’t Commingle Your Funds

It’s crucial to keep your personal and business finances separate. This means using separate bank accounts and credit cards for your business and personal expenses.

If you commingle your funds, you risk losing the legal protections offered by your LLC or corporation. If you get sued, the court may consider your business a sham, and your personal assets could be at risk.

3. Not Keeping Good Business Records

As a business owner, it’s important to keep good records. This includes keeping minutes of meetings, documenting important decisions, and maintaining accurate financial records.

If you’re a corporation, you need to have annual shareholders’ meetings and keep the minutes of the meeting.

If you don’t have good records, it could allow someone to pierce the corporate veil, which means that they can come after your personal assets in addition to your business assets.

4. Not Paying Yourself

It’s important to remember to pay yourself. Many small business owners put all of their profits back into the business, which can work for a while. But in the long run, you need to pay yourself. If you’re not paying yourself, you’re essentially working for free. You should pay yourself a salary, even if it’s a small one, and take distributions when the business is doing well.

5. Not Having a Business Plan

Having a business plan is crucial to your success as a small business owner. It’s not enough to know how to make your product or provide your service. You need to have a plan for the future of your business. This includes a marketing plan, financial projections, and a growth strategy. You also need to have a system in place to measure your success and adjust your plan as needed.

If you need help protecting your business, a Kernersville business lawyer can help. Get in touch with us today to start building a better future for your business.

FAQ: Small Business Ownership and Business Law

What is the difference between a sole proprietorship and an LLC?

A sole proprietorship is a business that is owned and run by one person, who is personally liable for all of the business’s debts and legal issues. An LLC, or limited liability company, is a business structure that offers legal protection to its owners. If the business is sued or goes into debt, the owner’s personal assets are protected.

Do I need a lawyer to set up an LLC?

While it is not required, it’s a good idea to consult with a business lawyer when setting up an LLC. A lawyer can help you ensure that you’ve set up the business correctly and that you’re taking all the necessary steps to protect yourself and your assets.

How often should I review and update my business plan?

It’s a good idea to review and update your business plan at least once a year. This will help you stay on track and adjust your strategy as needed.

What should I do if I’m being sued as a small business owner?

If you’re being sued as a small business owner, it’s important to contact a business lawyer as soon as possible. A lawyer can help you understand your options and guide you through the legal process.

Apple Payne Law Can Help

By following these tips, you can protect yourself and your business and set yourself up for success. If you need legal advice or help setting up your business, please contact us at Apple Payne Law. We offer free consultations to help you with all of your business needs. Remember, owning a small business can be incredibly rewarding, but it’s important to do it right.

Contact us today to schedule a free consultation.