First Person: An Accountant’s Guide to Common Financial Legal Issues

As an experienced accountant who helps various businesses with financial legal issues, I have come across many problems that could be solved more efficiently if they were dealt with before they occur.

To help you solve the potential legal complexities that your company is likely to experience, check out the following most common financial legal issues.

A Certified Public Accountant Can Help Spot Issues Early-on

You can prevent having to take steps to get lawyers involved in your financial legal issues if they are nipped in the bud early on. By hiring a certified public accountant to work regularly at your firm, you can have peace of mind that common financial legal issues are spotted and addressed before they get out of hand.

The advantage of using a CPA is he or she will have passed the CPA exam, which means you can trust the accountant is highly qualified to tackle your business’s issues. The CPA exam requirements vary from state to state in the U.S., so ensure the accountant you hire has the relevant credentials for your locality.

There are various CPA exam courses available for potential accountants to undertake.

Common Issues That Occur While Setting Up Your Business

Many everyday financial legal issues occur before a company has even started trading. If you are setting up a new business, you will undoubtedly face common concerns like the following.

–Liability Considerations Concerning Your Business Structure: You must decide how to structure your company. You could register as a sole partnership, a partnership, a limited partnership, a limited liability company, or a corporation. The type you choose will affect your liability status and how you pay your tax. If you don’t follow the rules for the kind of structure you create, there can be ramifications later on.

–Defining Relationships within Your Company: You must clearly and correctly note and regulate the liabilities and responsibilities of the people within your company. If you do not clearly define relationships like ownership and partnership, you’re almost sure to run into financial legal issues in the future.

–Obtaining Business Licenses: Depending on what your company does, you will have to apply for and get relevant licenses to operate lawfully.

Common Issues That Occur After Your Business Has Begun Operating

Once your business has started operating, there are numerous financial legal problems you could face. Here is a look at the most common:

Taxes

If you fail to comply with all the tax laws applicable to your business, you could end up with various legal issues. In turn, that means you could have to pay out hefty sums in penalties. Around 9% of small and medium businesses in the U.S. face legal problems every year because they have not followed the applicable rules and regulations. It is, therefore, imperative that you register with the tax authorities and coordinate your accounting procedures.

Late Payments

One of the most common financial legal issues faced by companies of all sizes is late payments. Indeed, around 11% of businesses in the U.S. experience being paid late by contractors and subcontractors. Be ready to solve these problems through the court system.

Copyright and Patent Issues

Many companies deal with copyright and patents, and tech-industry firms especially face aggressive patent litigation. Businesses often sit on patents for many years, in the hope that another company violates them, so they can get easy-money from filing lawsuits. You need to be aware of this trickery. Ensure you thoroughly research patents and copyrights for any product your company is developing. You can then avoid messy legal battles further down the line.

Also read: What is a Notice of Intent to Levy?

Bryce Welker is an active speaker, blogger, and tutor on accounting and finance. As the Founder of Crush The CPA Exam, he has helped thousands of candidates pass the CPA exam on their first attempt.