Three Small Business Legal Fears -- And How to Face Them

Halloween may be a time for tricking, treating and frightening fun, but it's important not to forget that there are real terrors at play. While they are not the same as those found in haunted houses, they can still sneak up and scare if small businesses aren't careful.

The first step in overcoming any fear is recognizing that you have one. Here are three common fears afflicting small businesses, and some help for how to face them:

Fear 1: Businesses can get sued for failing to provide employee health coverage.

If you are part of the 97 percent of U.S. small businesses that have fewer than 50 full-time employees, then you pretty much have nothing to worry about when it comes to providing health insurance. The employer mandate stipulated by the Affordable Care Act, better known as Obamacare, only applies to companies with more than 50 full-time workers.

Even if it does apply to you, the mandate does not go into effect until 2015, and businesses with over 50 full-time equivalent employees are exempt from the fee on their first 30 full-time workers, which greatly reduces the negative effect the law could have on businesses that just barely qualify.

Fear 2: I can get into trouble if I don't consult a lawyer before naming my company.

With more than four million small businesses in the U.S., there is a good chance that one of them will have your name. The last thing you want is to pick a name legally protected by another company. This can severely deplete resources that could be spent on growing your business, not fighting for it from the get-go.

No matter how clever or 'different' you believe your company's or product's names to be, always take preventive measures to ensure they have not been used and then legally protect them.

Fear 3: Small business assets are not always protected after incorporation.

This is a completely valid fear. Don't be fooled into thinking that just because you own a business that you are not personally responsible for the assets you acquire. You likely will have to cosign and, if you default, your wallet will experience a horror story of its own.

Be careful not to commingle funds. Using company money for personal items can expose your personal assets to creditors by giving them the chance to 'pierce the corporate veil' and claim that your company is really just a 'shell' of yourself.

This can best be avoided by following corporate formalities (i.e read your bylaws and/or operating agreement and follow exactly what they say). If you don't, you also risk creditors piercing the corporate veil and losing the corporate protection you were hoping for.

C. Mario Jaramillo, Esq., is a lawyer and Rocket Lawyer On-Call Attorney who has represented a multitude of clients, ranging from individuals to multi-national corporations. He currently focuses on assisting individuals with personal claims and small businesses with general matters.

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