10 Reasons to Work With a Lawyer When You Start a Business
Starting a business is a multi-step process that can be both exciting and overwhelming. Whether you're starting your enterprise on your own or with a group of business professionals, there are reasons to work with a business attorney during the startup process.
Protecting yourself and others from liability, debts, and unwanted legal action are just some of the many reasons to consult an attorney when you start a business. If you are unsure if you need legal advice or legal services, keep reading to learn the top ten reasons you can benefit from working with a small business lawyer.
Reason 1: Contract Drafting and Review is Critical, Even for Small Businesses
Most businesses execute contracts for real estate leases, services, supplies, and employment – just to name a few legal matters and legal documents. Even small business owners often have agreements between partners, investors, and employees, which are meant to protect all parties involved in the contract. These may come in the form of partnership agreements, LLC operating agreements, business loans contracts, and other disclaimer templates.
It's important you have a business lawyer review all contracts to help make sure your rights are protected. Getting legal help from the right lawyer early on can help you more easily avoid future legal issues.
Reason 2: Registration, Licensing, and Permit Matters Can Be Complex
Depending on the business structure and type of business, some business entities are required to register with the city, county, or state in order to be recognized as a legal business. Even businesses without the legal requirement of incorporation or formal registration may be obligated to obtain licenses or permits.
Registration processes and renewals can be complicated, especially if your business requires multiple ones. An attorney can help you stay organized and make sure your business is compliant.
Reason 3: Choosing the Wrong Business Entity Could Put You at Risk For Costly Legal Issues
The way you structure your own business formation, whether it's a sole proprietorship, partnership, LLC, or corporation, can dictate your responsibilities as a business owner. The structure you choose also affects your legal responsibilities and liability as an entrepreneur.
For example, choosing the wrong entity can create legal problems and make you personally liable for your employees or partners if they engage in legal wrongdoings. In order to avoid choosing the wrong entity, you should consider consulting a business attorney.
Reason 4: You Might Deal With Complexities Concerning Multi-State Businesses
The preconditions of forming and conducting a business entity in one state may not be accepted or legal in another state. If you are not strategic in how you deal with businesses across state lines, you might only be protected under certain operations or functions. Visit FindLaw's State Business Laws section for more details and to learn how to get help from a law firm in your state.
Reason 5: You Could Lose Protection if You Do Not Follow Strict Conformity
With some business entities, you must strictly conform to the state law governing that business form. For example, an LLC's articles of organization may need to be properly filed (with filing fees paid), and a registered agent may need to be periodically designated through your jurisdiction's Secretary of State.
If you do not strictly conform to the state laws, there is a chance you may lose the benefits and protections (such as limited liability protections) associated with those laws. A business attorney can help make sure your business is fully protected at all times.
Reason 6: A Business Lawyer Can Help You Understand Capital and Related Money Matters
Businesses need to raise money, keep records of income and distributions, and behave in a fiscally-responsible manner. Different business entities may require different procedures for raising capital and making distributions, so it's important you have a business formation lawyer take a look at the requirements for your specific entity type. This can help make sure you avoid liability and potential tax issues.
Moreover, the input of a business attorney can help you formulate an optimal business plan that correctly communicates your business needs and goals to potential investors.
Reason 7: There Are a Variety of Entities to Choose From With Business Formation
Although there are only a handful of business entities to choose from, there are other options within these entities that determine important designations. This includes taxation, liability for partners, and more. Some of the common business entities include:
- Sole Proprietorships
- Limited Liability Companies (LLCs) and Corporations
- Non-profit organizations
Choosing the wrong business entity can have financial and legal consequences, and a business lawyer can walk you through considerations to make when forming your business.
Reason 8: Autonomy for State Business Laws Can Be Complicated
With many business entities, the things you don't or can't make choices on are decided on your behalf. Most states have adopted "Uniform Laws" that fill in the gaps for business entities where their charters, corporate by-laws or LLC operating agreements, and other organizing documents are silent. You may be subject to a whole set of laws and regulations that you don't even know exist, and a lawyer will make sure you're aware of these and handle legal issues that may arise.
Reason 9: Tax Liability Can Be Costly Without Advice From a Business Lawyer
Different business forms provide different tax advantages and disadvantages, and the only thing more crucial to a new business than taxes is choosing the right business formation.
Having a business or tax lawyer assess liability and help with the process of obtaining an employer identification number from the IRS can save you time, money, and future stress and complications. Visit FindLaw's business tax section for more information on tax law basics.
Reason 10: You Can Avoid General Legal Issues With Help From an Attorney
Different business formations provide both protections and risks to the business owner or investor. Personal liability is a big factor and can put everything you own at risk if you don't assess personal liability.
Business attorneys can help you avoid risky situations, help minimize overall liability, and make sure you're educated about business laws you may be subject to. To learn more about how a lawyer can help with liability issues, see Findlaw's Business Liability section.
Ready to Talk to a Business Lawyer?
While working with an attorney is an upfront investment, it can give you both the short and long-term protection you need to keep your focus solely on your business. Working with a business lawyer can also put your mind at ease and cover all your bases — from business formation to employment law compliance and contract review.
Get in touch with a business law attorney near you today to discuss your needs and obtain a referral for your case.
Was this helpful?
You Don’t Have To Solve This on Your Own – Get a Lawyer’s Help
Meeting with a lawyer can help you understand your options and how to best protect your rights. Visit our attorney directory to find a lawyer near you who can help.