Most legal problems in small businesses come from five places: the structure you trade through, the contracts you sign, how you employ people, whether you own your own brand, and how you handle customer information. Almost all of them are cheaper to prevent than to resolve, and most cost nothing but attention at the start.
Work through them in this order, because each depends on the one before it.
Trade through the right structure
A sole proprietor is personally liable for everything the business owes. A registered company is a separate legal person, which is why it can own assets, sign contracts, be sold, and limit personal exposure.
Register with the Companies and Intellectual Property Commission and keep annual returns current, because lapsed returns can lead to deregistration, and a deregistered company cannot lawfully trade. Note that limited liability is undone by personal surety, which banks and landlords routinely require, so read what you sign.
Put contracts in writing, and read the exit terms
The clauses that matter are rarely about price. They are about what happens when something goes wrong: cancellation, late payment, quality disputes, termination and who owns work created.
Contract in the company name, not your own. And read supplier and lease agreements as carefully as customer ones, because long commitments with escalation are where avoidable cost accumulates.
Employment obligations start with the first person
Written particulars of employment, accurate pay and time records, lawful deductions only, UIF registration and statutory leave apply from day one and cannot be contracted out of.
Dismissal requires a fair reason and a fair procedure, and employers lose on procedure far more often than substance. The statutes and current thresholds are published by the Department of Employment and Labour.
Own your brand and protect your data
Registering a company name gives you no trademark rights. Trademarks are separate, granted per class of goods or services, and searching the register before committing to a name is far cheaper than rebranding later.
Any business holding customer or staff information carries duties under the Protection of Personal Information Act, overseen by the Information Regulator. Size is not an exemption.
Frequently asked questions
Should I register a company or trade as a sole proprietor?
A company separates your personal assets from the business and can be sold. A sole proprietor is personally liable for everything the business owes.
Does limited liability always protect me?
No. Personal surety, which banks and landlords routinely require, puts your own assets behind the obligation regardless of the structure.
What matters most in a contract?
The clauses covering cancellation, late payment, disputes, termination and ownership of work created, rather than the price.
When do employment obligations start?
With your first employee. Written particulars, pay records, lawful deductions, UIF and statutory leave apply immediately.
Does company registration protect my brand name?
No. Trademark registration is separate and granted per class. Search the register before committing to a name.
Further reading
Originally published in July 2018. Updated September 2026 into a practical legal guide covering the five areas that cause most small business problems.
