Four Common Legal Threats to Small Businesses

As a small business owner, it is likely you face your fair share of challenges each and every day, but did you know that some threats have the potential to land you in court? But don’t worry – as long as you are aware of the risks and take the necessary steps to protect your business, you hopefully won’t ever find yourself in the firing line of questioning in a courtroom.

This article will describe 4 common legal threats to small businesses and provide tips on how to protect yourself.

  • Discrimination/Harassment

If an employee, client or customer feels that they have been on the receiving end of discrimination or harassment by your business or an employee, this could signal significant legal issues. For example, your business could come under fire for not hiring people of a specific race, age, race, sex, religion, or other characteristic. Some helpful ways of protecting yourself from such claims include:

  • Be careful not to engage in any discriminatory or harassing promotion, advertising, social media activity, or customer selection processes.
  • Encourage employees to discuss any concerns they may have with you.
  • Hold regular meetings to oversee co-worker relations.
  • During the hiring process, make sure you have all applicants’ resumes and are prepared with an argument for how you selected the most qualified individuals.


  • Intellectual Property

Many small business owners seem to forget to do the necessary intellectual property checks when setting up their business – particularly in relation to trademarks, copyright, and patents.

First, every business needs to do trademark searches before using marketing material such as logos or catch phrases.

Second, cutting edge businesses in the tech industry often face aggressive patent litigation. But patent issues aren’t reserved for those businesses alone – sometimes entire business models are patented and can’t be used by others.

Last, make sure you know the rules relating to copyright and you have paid any necessary fees before using the work of others for your business. The small amount you pay a solicitor to do these checks for you could save you from the potential devastation of a large-scale lawsuit!

  • Contractor Disputes

It is common for small businesses to outsource certain tasks to contractors, such as computer support or payroll. Unfortunately, these relationships sometimes go sour and the business or contractor ends up suing for lost income. Prevention is always better than cure in these situations. Here are some tips on how to deal with contractors to prevent any legal issues arising:

  • Make sure the contractor understands your needs and expectations before accepting the job.
  • Use contracts to clearly communicate the terms of the agreement, and have both parties sign it.
  • Before selecting a contractor, do a thorough check on all candidates for the job.


  • Spamming

Consumers are offered protection to their rights to privacy, and it is the responsibility of every business to not impeach upon these rights. One common way that businesses find themselves in trouble with the law is by spamming their customers and potential customers.

The Spam Act 2003 operates Australia-wide and prohibits the sending of unsolicited commercial electronic messages – commonly known as spam. Spam is defined broadly by the Act to include any message that offers, advertises or promotes commercial products and interests.

As a business owner, there are 3 basic rules you should follow when promoting via electronic messages:

  1. You must have the recipient’s consent – express consent is advised, but it can be inferred.
  2. You must identify yourself or your business and provide contact information.
  3. You must provide an unsubscribe option in any emails you send.

Preparation in Key

Now that you know the legal threats to your business, the best way to protect yourself is to be proactive and be prepared ASAP! Developing a comprehensive legal protection strategy could mean all the difference for the health of your business tomorrow.

About Your Guest Blogger: With over 20 years’ legal and business experience, Katherine Hawes is the founder and principal solicitor of Aquarius Lawyers. To find out more about her fixed rate small business packages, please see: Digital Age Lawyers