Do I Need a Lawyer To Start a Business?
It is a common question for any entrepreneur to ask. After all, business owners wear many hats. However, a frequent mistake that entrepreneurs make is to do everything themselves. Not only does it take time away from their business goals, but it also slows their progress. On the other hand, successful business owners know their talents and what tasks they can outsource.
One of the ten common traits among entrepreneurs is delegating responsibilities to others, thereby freeing up their time. The key, of course, is knowing which tasks to delegate.
When deciding to use an attorney for your business, list the steps needed to start your venture and determine who is best doing that work. But keep in mind that there are specific reasons why you may need an attorney for your business.
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What You Can Do Without a Lawyer
Of course, you do not need a lawyer for every aspect of your company. There are many things you can do by yourself. However, the question you should always ask is whether it is an efficient use of your time.
Write a Business Plan
A business plan is a critical step in organizing your ideas. Additionally, banks and investors will want to review your project before they give you funds. Therefore, a comprehensive analysis of your venture helps to secure funding from banks or investors.
A business plan starts with a mission statement and then outlines the framework of your company. You identify your market, customer base, business opportunities and challenges, projected costs, profits, and how you will fund your business. There are several online templates you can use to draft your business plan.
A lawyer can review your business plan and flag issues of concern. Or they can draft your plan for you. Since a sound business plan is critical to get a business loan or investors on board, it is worth the investment to have an attorney review it.
Choose Your Business Name
Your business name is a vital piece of the brand you develop. You create the image you want to project about your enterprise. Therefore, you should settle on a name.
Before committing to a name, search on the internet and with the Secretary of State to ensure no one else uses that name. You do not want to infringe on a trademark. Similarly, choose a name that you can protect with a trademark and use as your website domain. If you are unsure whether the name you want is available, an intellectual property attorney can help you conduct a thorough trademark search.
Register Your Name
Once you have a name, register it under a DBA or "doing business as" with your state or local jurisdiction. Fictitious name registration has different requirements depending on where your business resides.
Apply for an Employer Identification Number
Once you determine your corporate structure and register it with the Secretary of State, you should apply for an Employment Identification Number (EIN) under your company name. Use this taxpayer identification number to open bank accounts, apply for loans, pay employees, and file your company taxes.
Open a Bank Account and Handle Accounting
Open a bank account under your business name to receive income and pay bills. The bank will want your business name, articles of incorporation or organization (if you have a corporate entity), and your EIN.
Similarly, you can handle all your bookkeeping, invoicing, and accounts payable in-house. Therefore, you do not need to hire a lawyer for general business operations.
Apply for Business Licenses and Permits
Business owners must know all regulatory requirements. When you open a business, you will need a business license and all necessary permits to operate your company.
Contact your city and or state to apply for a business license. Each jurisdiction has its own rules and requirements.
You can research what city, state, and federal permits you need for your company by contacting your local business license agency and searching online. Unless your business activity is subject to special regulations governed by a federal agency, you can complete and file the paperwork.
What a Lawyer Can Do for You
Determine the Best Business Structure
You can often create your corporation paperwork to file with the Secretary of State using online forms. But, first, you must choose the proper corporate structure for you. There are many factors to consider, namely tax advantages and liability protection. Furthermore, if you want to have partners or shareholders, it is crucial to use the correct corporate entity.
Probably the best legal advice a business attorney can give is how to correctly set up your company to minimize your taxes and business liabilities. An attorney can show you the advantages and drawbacks of your business formation to tailor the right one for you.
For example, suppose you have a business with a partner. In that case, an attorney will talk to you about setting up a corporation, limited partnership, or limited liability company. They all could work, but the attorney will recommend the best choice for your situation.
It is worth hiring an attorney to help with your initial corporate setup. Choosing the wrong corporate structure is a costly mistake you do not want to make.
Draft Partnership Agreements
Many companies start with a partner or partners where each person brings a talent to the enterprise. A business lawyer can draft a partnership agreement outlining each partner's rights and responsibilities.
Equally important is addressing how a partnership may change as the business grows (i.e., one partner wants to leave the company). Again, enlisting the services of an attorney will define the relationship and avoid future conflicts.
Protect Intellectual Property
If you create a product or invention, you should have patent protection. If you have a brand name, logo, or slogan, you should safeguard it under trademark law.
An intellectual property lawyer knows how to protect your ideas and brand. Unfortunately, it takes a significant amount of time to research copyrights, trademarks, and patents. Not to mention filing applications. It is better to spend your time developing your products and brand than learning the intricacies of intellectual property law.
Draft Contracts and Agreements
A business attorney can help you draft documents and agreements for your business. For example, when you start your company, you may need an operating agreement or bylaws.
When you hire employees, you may want them to sign confidentiality or non-compete agreements.
In addition, business owners frequently use sales contracts, delivery agreements, and equipment leases. Having an attorney review these documents and advocate for your interests can save you time and trouble in the future.
Draft Employment and Independent Contractor Agreements
If you have employees, you will want employment agreements spelling out the terms of the working relationship. Additionally, you want to avoid potential lawsuits if you need to discipline or terminate the employee.
Suppose you outsource responsibilities to other people who are not your employee (i.e., independent contractors). In that case, you may need a business attorney to draft an independent contractor agreement.
Review Lease Agreements
If you lease space for your company, it is wise to have an attorney review the lease documents to ensure you are not signing up for more (or less) than you bargained. In addition, attorneys can review your lease agreement for terms that could be troublesome.
Suppose your landlord is not keeping their promises which impacts your business. In that case, it is handy to have your lawyer negotiate on your behalf. Additionally, they might get more favorable terms for you.
Protect Your Personal Assets From Business Liabilities
Another significant benefit of legal counsel is to protect your personal assets from your business activities. Lawyers advise how to set up your company so that lawsuits and claims against your business do not go after your personal bank account, home, or other assets.
Lawyers will also review your business operations and advise how to avoid lawsuits and liability. For example, they may draft warnings or disclaimers for products. Or they may write up company policies and procedures for employees to follow.
If someone sues your company, it is helpful to have an attorney knowledgeable about your company in your corner.
Explain Tax Advantages
Lawyers are well versed in knowing how businesses can reduce their tax burden. They know all the deductions you can take and can help in an audit.
Tax lawyers can also advise on business strategies to reduce taxes. For example, they might recommend launching or expanding your business in one state instead of another. As a result, you might save thousands of dollars in taxes by paying a few hundred in legal fees.
Help Expand Business into Other States and Countries
Suppose you wanted to operate your business in another state or country. In that case, you must follow specific government regulations and obtain permits. An attorney can navigate you through the process of getting authorized to do business in another state or country.
Keep Your Business Compliant with Federal and State Laws
A business attorney keeps abreast of changes in federal and state laws that will affect your business. Therefore, they can advise you of any changes to keep your company compliant with current regulations or requirements.
How to Find the Right Lawyer
Your attorney is an integral part of your team, so you should find someone who understands your business. Among the questions you should ask when hiring a business lawyer is their hourly cost and the types of companies they help.
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.