As with any other jargon, discussing the legal terms associated with your carwash can be exhausting. However, according to the National Federation of Independent Business (NFIB), putting off legal matters can turn into painful mistakes and lawsuits. Make sure you talk with a knowledgeable small business attorney to avoid the following mistakes, which the NFIB article notes are some of the most common errors small businesses make.

  1. Not forming a legal entity. This is especially prevalent among organizations without storefronts, says attorney Chad Snyder in the article. Establishing a legal entity protects owners from the business’ liabilities. Since 43 percent of small business owners have been either threatened with or involved in a lawsuit, this action can help your business in times of trouble, explains the article.
  2. Mixing good business and personal finances. Use a separate bank account for your business, states the article. Your assets aren’t protected just because you’ve filed to form an LLC or corporation. “When it comes time to pay yourself, the business writes you a check, and you deposit it in your personal account,” shares Snyder in the article. “If you don’t treat your business as an entity separate and distinct from you, neither will the courts.”
  3. Misclassifying independent contractors and employees. Protect yourself by correctly classifying your employees. If a misclassified worker is terminated, he or she may not be happy about it and could bring up labor law violations, explains the article. Business owners could be liable for fines, penalties and back taxes if that happens. If you employ an incorrectly classified worker, fill out the necessary paperwork to fix it before it turns into a difficult problem.
  4. Failure to screen for trademark availability and protection. File an “intent to use” application before you name your company or product, the article recommends. Trademark battles can be costly, so make sure you do your due diligence before any questions are raised. Register all trademarks with the federal government before you launch your carwash.

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