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Top 10 Reasons To Work With a Lawyer When You Start a Business

Starting a business is a multi-step process that can be 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 is important. These are also reasons to consult an attorney when you start a business. Keep reading if you are unsure if you need legal advice or legal services. This article helps you learn the top ten benefits of working with a small business lawyer.

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#1: Contract Drafting and Review Is Critical, Even for Small Businesses

Most businesses execute contracts for legal matters and legal documents like:

  • Real estate leases
  • Services
  • Supplies
  • Employment

Small business owners have agreements between partners, investors, and employees. The agreements should protect all parties involved in the contract. Some examples are:

You must have a business lawyer review all contracts to help make sure you protect your rights. Getting legal help from the right lawyer early on can help you avoid future legal issues.

#2: Registration, Licensing, and Permit Matters Can Be Complex

Depending on the business structure and type of business, some business entities must register with the city, county, or state. This is how they gain recognition as a legal business. Even businesses without the legal requirement of incorporation or formal registration may have to obtain licenses or permits.

Registration processes and renewals are complicated, especially if your business requires many of them. An attorney can help you stay organized and make sure your business is compliant.

#3: Choosing the Wrong Business Entity Could Put You at Risk for Costly Legal Issues

How you structure your business formation, whether a sole proprietorshippartnershipLLC, or corporation, dictates your responsibilities as a business owner. Your chosen structure 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. Personal liability allows a jury or court to seize your personal assets to pay a judgment. You should consider consulting a business attorney to avoid choosing the wrong entity.

#4: You Might Deal With Complexities Concerning Multi-State Businesses

Another state may not accept the preconditions of forming and conducting a business entity in the same way your home state does. Suppose you are not strategic in dealing with businesses across state lines. In that case, 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.

#5: You Could Lose Protection if You Do Not Follow Strict Conformity

With some business entities, you must conform to the state law governing that business form. For example, an LLC's articles of organization may need filing, with filing fees paid. A registered agent needs designation through your jurisdiction's secretary of state.

Suppose you do not strictly conform to the state laws. In that case, 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 ensure your business is always protected.

#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 you must have a business formation lawyer 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 communicates your business needs and goals to potential investors.

#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, other options within these entities determine important designations. This includes taxation and liability for partners. Some common business entities include:

  • Sole Proprietorships
  • Partnerships (limited partnerships and general partnerships)
  • Limited Liability Companies (LLCs)
  • Corporations
  • Co-Ops
  • Non-profit organizations

Choosing the wrong business entity can have financial and legal consequences. Picking a business name that does not conflict with a pre-existing trademarkcopyright, or forms of intellectual property is also important. A small business lawyer can walk you through considerations to make when forming your business.

#8: Autonomy for State Business Laws Is Complicated

With many business entities, state law decides the things you don't or can't make choices on. Most states have adopted "Uniform Laws" that fill in the gaps for business entities where their charters, corporate by-laws, LLC operating agreements, and other organizing documents are silent. You may be subject to a set of laws and regulations you don't even know exist. A lawyer will make sure you're aware of these and handle legal issues that may arise.

#9: Tax Liability Is Costly Without Advice From a Business Lawyer

Different business forms provide different tax advantages and disadvantages. Choosing the right business formation is the only thing more crucial to a new business than taxes.

Having a business or tax lawyer assess liability and help obtain 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.

#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 significant 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 lessen liability, and make sure you're educated about business laws. 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.

Contact a business law attorney near you today to discuss your needs and obtain a referral for your case.

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