If you're a small business owner who knows little about the legalities involved with running a small business you're not alone. The Small Business Association recommends that small business owners take one if not several legal classes in order to familiarize themselves with potential legal issues. Not knowing where you stand in certain legal matters can leave you at a serious disadvantage. Get to know your rights so you can make smart business decisions.

In today's world of technology, several resources offer up-to-date material on business procedures that directly affect the legitimacy of a company. The following are a list of common mistakes and 'how-to' avoid repeating them.

For most business transactions you want to create and sign a contract. Contracts or service agreements allows you to define what your services or products entail. Service agreements are an important way that you can protect yourself and your business. Don't overlook this important aspect of small businesses.

Start by listing the 'scope' of the service. For instance, cleaning a home would take 2-hours. In those 2-hours, list 'what' service and 'how' long it will take. Include anything that may be a special request. Excluding a portion of the service could be a costly mistake. Drafting a contract takes time, but it is necessary.

As a small business you may or may not have several employees working for you. The termination of an employee is a touchy subject but may be necessary at some point in time. You should be clear on employee termination laws and regulations.

Disgruntled ex employees may threaten to sue you with a wrongful dismissal suit or similar legal action. It is vital that you know your rights and what you can do in this type of situation.

Since labor taxes can be so high many small business owners choose to hire independent contractors. Independent contractors are required by the IRS to claim and file themselves. You may think this makes things much easier on you.

You should know that some jobs are actually considered to be an employee's job regardless if it is done by an independent contractor or not. The IRS has its own definitions that you should be aware of before hiring any independent contractor. Protect yourself and your business and be fully aware of any legal ramifications before making any business decisions.

If you own a small business with someone else you need to know about the legal definitions of your partnership. If you're a sole proprietor this means you own the business yourself and can be held legally responsible for anything to do with your business.

Start a business as a L.L.C. (Limited Liability Corporation) instead. This will eliminate the risk of loosing personal funds due to allegations in a lawsuit.

Intellectual Property Issues ? Even low-tech companies have intellectual proper issues that directly affect the long-term success of the business. Pay close attention to confidentiality and invention assignment agreements, registered trademarks, and copyright notices. Protect the company's trade secrets adequately.

Accounting and record keeping are vital to any company. Failure to do so can get you into serious trouble with the IRS. Keep proper paper and electronic copies of all business transactions.

Experienced Corporate Attorney ? No matter what entity a business operates under, a growing business will face issues that require the service of an experienced attorney. Unfortunately, cost is a huge issue for most small business owners. Corporate attorneys do charge a much larger sum for their services.

In any of the above situations you may find it necessary to contact an experienced corporate attorney. Almost all businesses at some point in time will need the advice or services of a professional. While most attorneys do charge a high fee, there are times when this is necessary.

Without a doubt, a business should run erring on the side of caution. Choosing to operate without the proper knowledge on business laws and business ethics, will lead to disaster. Check with an attorney before pursuing a business and start on the right foot.