Something quite concerning that I see almost weekly in my business is when business coaches overstep and get it wrong.

A great business coach is invaluable for growth and strategy but when it comes to legal advice, there is a hard line and they should not be crossing it. More often than not, business coaches inadvertently step into legal territory with good intentions and a desire to help their clients, but a great business coach will know when they are stepping beyond their areas of expertise. At this point, the best way to help their clients is to refer them to a business lawyer or accountant.

Today I’m sharing 5 areas where I see business coaches overstepping and providing legal advice and the red flags you should look out for.

1. Business Structure Decisions

"Just stay as a sole trader" might sound like simple advice, but it's far from it. Your business structure affects everything from tax obligations to personal liability. This isn't coaching territory - it's a decision that needs both legal and accounting expertise.

2. Employee vs. Contractor

The distinction between employees and contractors isn't just about work arrangements - it's about legal obligations, rights, and responsibilities. With laws constantly changing, this is one area where well-meaning coaching advice could lead you down a costly path.

3. Late Payment Penalties

Your business coach wants to make sure you get paid what you deserve but before you implement that late fee system they suggested, pause. Under the law, you cannot impose payment penalties for late payments. Getting this wrong could make your entire contract void. This is where you really need to work with a business lawyer to create payment terms that protect your business while meeting your legal obligations.

4. Termination Clauses

Since November's legal changes, termination clauses have become more complex than ever and this isn't something you want to get wrong. While a coach might understand business relationships, the legal intricacies of contract termination need professional legal oversight. Your business deserves protection that stands up in court.

5. Templates

Templates might seem like a money-saving shortcut, but generic solutions do not provide the protection that your specific business needs. Every business is unique, even within the same industry, and your legal documents should reflect that. This is something I consistently get asked about and my answer is always the same - it is absolutely vital that your legal documents are properly tailored to your unique business.

Business coaching is about growth, strategy, and development. Legal advice is about protection, compliance, and risk management. Both are crucial, but they serve different purposes.

So, if you are working with somebody or considering working with somebody who might be veering into areas that are outside their expertise, my advice, business owner to business owner, is to stop there. Pay attention to the red flags and move on before any real damage is done.

LINKS:

Sign up for my fortnightly Briefing Notes here

Discover the Masterclass Series here

Check Your Legals with the Essential Legal Checklist here

Book a Free 20-minute Initial Consult with me here

Join me on Instagram here