Many small green businesses fold early in the game. That’s because of a lack of knowledge and ensuing poor decisions that the owners have made. With the right advice, you can avoid these pitfalls. We discuss some of the key aspects small business owners need to pay attention to. All so that the best decisions in their particular circumstances can be taken.
What Is the Best Legal Structure for Your Business?
The first point of impact for your small green business. Once you have chosen a legal structure it’s essential. For this is how it affects your federal and state tax burden. Sole proprietors, S corporation owners, and partnership owners claim income as personal and cannot sell stocks or fundraise.
A C corporation structure separates an owner’s income from the business income. An LLC (limited liability company) is only recognized by the state and not by the federal government Instead, C corporations are accepted by federal agents. Both LLCs and C corporations have liability protection. Articles of incorporation must be filed by corporations. They are required to submit various reports to the government at certain times. They are compelled to have a set number of board meetings.
You will need an employer identification number to obtain business licenses, regardless of the structure, so this decision must be made as early as possible. It is not easy to change your business’s legal structure later, but it can be done.
Small Business Insurance
Small businesses face many potential risks. For example, a fire can destroy your business premises and building, your stock, and your equipment. Insurance is the shock absorber that allows you to repair damage and recover your losses so that you can be up and running as soon as possible.
We are going to cover the two most important types of insurance that protect you from potential liability claims. These are general liability insurance and workers’ comp and both are needed as they cover different aspects of your business.
General liability insurance covers property damage, physical injury, and personal injury. Property damage is for events such as an employee dropping a load of bricks on a customer’s vehicle. Physical injury can be sustained on your property as a result of negligence, e.g., by not putting up ‘wet floor’ signs. Personal injury refers to aspects such as slander and libel, damage to reputation, and copyright infringement.
Workers’ compensation pays for an employee’s needs when they are injured or develop a disease due to working conditions. It includes death benefits, permanent injury, retraining if they can no longer perform their previous job, lost wages during recovery, and medical expenses.
You may want to consider additional cover in case of fires, floods, etc.
Protecting Against Customers Who Default
When you encounter a potential business-to-business (B2B) customer, you should perform a credit check before doing business with them. You don’t want to have customers who default on payments. Get a contract for every job or service. This is your legal proof, and it may enable the courts to force the company to pay you for work done. Specify full details of the job on the contract.
In business, what you don’t know CAN hurt you. Make sure you have a good legal practitioner to advise you.