Mistakes that Illinois small business owners to avoid

While starting a business can be an exciting proposition, there are steps that need to be taken to increase the odds that the business will succeed. The first step to take is to form a legal entity that is separate from the owner. However, many independent contractors and others that do not have a storefront do not do this despite the risk of a lawsuit.

According to the U.S. Chamber Institute for Legal Reform, 43 percent of business owners say that they have been threatened with or are involved in a civil case. One common cause of a lawsuit relates to improperly classifying employees as independent contractors. Doing so could be a violation of labor law and could result in a business being fined, facing back taxes and other financial penalties.

Another important mistake to avoid is the use of business funds for personal reasons. When a business owner takes money out of the company, that money should be submitted as an expense that needs to be reimbursed. The best way to avoid mixing personal funds and business funds is to set up a business bank account that is separate from the business owner's personal account. Failing to do so could jeopardize the LLC as an entity separate from the business owner.

Small business owners who are starting a new company or changing the status of their business may wish to consult with a business law attorney. An attorney may be able to draft documents that may be legally binding in court. These documents may range from business contracts with customers to employment agreements with employees and independent contractors. Legal counsel may also be able to represent business owners in court if disputes arise with vendors, customers or workers.

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