Navigating Small Claims Court: Things to Consider for Small Businesses

As a small business owner, you know the amount of legal challenges that can frequently arise. What should you do if a minor legal issue with a customer or employee turns into a legal battle?Small claims court may give you the opportunity to get quick resolution to legal disputes. It can be a great way for small business owners like you to resolve legal differences with an opposing party without having to spend exorbitant amounts of money on a big court case.

How small claims court may be helpful for small business owners

Considering or facing a small claims court case? Here’s why this could be beneficial for you and your small business:

• You may be able to file small business claims in small claims court.
• It's typically cheaper and faster to deal with low-dollar lawsuits or cases in small claims court. Small claims courts have a dollar limit that your case must meet or fall under in order to qualify. If the cost of your civil case falls beneath that maximum amount, you may be able to pursue a small claims case.

How the small claims process works

You’ll need to make sure you follow the correct steps to file your lawsuit and go to small claims court. There may be special rules about representing a business in a small claims case. Depending on the laws of the state, the business may not be able to represent itself in court without an attorney. In some states, an attorney may not be able to represent a party in small claims court.

1. Know the name and address of the person you are suing, as well as the amount of money you want to sue them for.
2. Create your official statement by gathering evidence such as receipts for unpaid bills, invoices, etc.
3. Know your court date and have the opposing party properly served.
4. Attend your hearing date and be prepared for a trial if the matter is not resolved.
5. If you win, you can receive a money judgement after hearing the final result of the case. There are things to consider when seeking to collect on the judgment, which may include executing on the defendant’s property or garnishment.

Cost of small claims court

As previously stated, the maximum dollar amount that can be settled upon in small claims court varies from state to state. Some states only deal with amounts up to $5,000, while other states may deal with up to $10,000. There will be court costs and a cost to serve the other party.

Is it worth going to small claims court for smaller amounts?

Do you have a dispute with someone over a relatively small amount of money? You should consider the potential costs and time to pursue a judgment and the ability to collect on the judgment. It still may be worthwhile to take that person to small claims court.

Before you decide your dispute isn’t worth the hassle, consider these common types of cases that are brought before small claims court judges:

• Landlord/tenant problems: When navigating a business relationship with someone who lives on your property, legal issues can frequently arise. Perhaps a tenant damages your property, you have a contract disagreement, or you need to evict them. Small claims court can help you deal with these legal matters.
• Unpaid bills: As a business owner, you need to be paid the money you're owed. What if a customer keeps forgetting to pay their bills, or simply refuses to do so? If the amount of unpaid money falls within your local small claims court limit, you can fight to get your hard-earned money.
• Contract disputes: You may think your business contract was perfectly clear, but people can easily misunderstand or refuse to abide by the terms you’ve carefully laid out. It may be a good option to take them to small claims court to seek to resolve these disputes.

Affordable legal options for small claims

Wondering how to choose the right lawyer for your small claims case? Let LegalShield help you! We offer access to legal protection for small businesses, with options for legal protection plans so you can choose the right plan for your business.We put you in contact with a provider law firm in your state for an affordable monthly cost. That provider law firm may consult on business legal matters; help with business document review; if necessary, make phone calls or write letters on their official letterhead; and perform other essential legal services for your business. For certain legal matters or services there is a 25% discount from the provider attorney’s hourly rate.

You can rest easy knowing that LegalShield offers you affordable access to the law firm you need for the legal situations your business may face!

Navigate small claims with a LegalShield small business plan tailored to your specific needs.