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Do I Need a Lawyer To Start a Business?

Does a small business even need a lawyer? It's a common question many entrepreneurs ask at start up. A small business owner wears many hats, especially at start up. But entrepreneurs frequently make the mistake of doing everything by themselves. Not only does it take time away from their business goals, but it also slows their progress. Trying to figure out business law legal issues is not a task most entrepreneurs want to do.

This article can help you decide whether hiring a small business lawyer is right for your business. There are specific reasons why you may need an attorney. Sometimes, a small business may not need to pay for legal advice.

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Legal Matters You Could Do Without a Lawyer

Of course, you don't need a lawyer for every aspect of your company. There are many things you can do by yourself.

However, you should always ask whether it's an efficient use of your time.

Writing a Business Plan

business plan is a critical step in organizing your new business ideas. Banks and investors review it before giving funding, too. So, a comprehensive analysis of your venture helps to secure funding from banks or investors.

While a business plan has many components, it's manageable for a sole proprietorship to handle alone. It starts with a mission statement and then outlines the framework of your company.

A small business identifies its:

  • Target market
  • Small business opportunities
  • Small business challenges
  • Projected costs
  • Projected profits
  • Funding and financing

A lawyer can review your business plan and flag legal issues or other issues of concern. A small business attorney can draft your plan for you. Since a sound business plan is critical to getting a business loan or investors on board, having an attorney review it is worth the investment. You can find a lawyer in your area at FindLaw. But make sure to check with your state bar association, too.

Choosing 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. Picking the wrong name without a thorough search could cause you legal problems in the future.

Before committing to a name, search on the internet and with the secretary of state to ensure no one else uses that name. You don't want to infringe on a trademark. Choose a name you can protect with a trademark and use as your website domain and social media handles.

If you're unsure whether the name you want is available, an intellectual property attorney can help you conduct a thorough trademark search.

Registering Your Name

Once you have a name, register it under a DBA or "doing business as" with your state or local jurisdiction (county).

Applying for an Employer Identification Number (EIN)

Once you determine your corporate structure and register it with the secretary of state, you can apply for an Employment Identification Number (EIN). This is the number on file with the Internal Revenue Service (IRS). Most new business owners can do this without needing legal help.

An EIN allows you to open bank accounts, apply for loans, pay employees, and file corporate taxes.

Opening a Bank Account and 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. You can handle your bookkeeping, invoicing, and accounts payable in-house. You don't need to hire a lawyer for general business operations.

Applying for Business Licenses and Permits

Business owners must know all regulatory requirements. When you open a business, you'll need a business license and all necessary permits to operate your company.

You can research what city, state, and federal permits your company needs on your own. Unless your business activity is subject to special regulations, like marijuana businesses, you can handle this independently.

Legal Matters You Should Hire a Small Business Lawyer For

Sometimes, your business will have legal needs for which you just can't avoid hiring a lawyer. Below, we discuss some of those instances.

Determining 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 business structure. There are many factors to consider, namely tax advantages and liability protection. If you want to have partners or shareholders, using the correct corporate entity is crucial.

A business attorney can advise you on minimizing tax liabilities and explain how to protect yourself from business liability.

For example, suppose you have a business with a partner. An attorney can guide you through the pros and cons of setting up a corporation, partnership, or limited liability company. Each could work, but the attorney will recommend the best choice for your situation.

It's worth hiring an attorney to help with your initial corporate setup. Choosing the wrong corporate structure is a costly mistake you don't want to make.

Drafting 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 (e.g., one partner wants to leave the company). Again, enlisting the services of an attorney will define the relationship and avoid future conflicts.

Protecting 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 significant time to research copyrights, trademarks, and patents. Not to mention filing applications. It's better to spend time developing your products and brand than learning the intricacies of intellectual property law.

Drafting 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 (for an LLC) or bylaws (for a corporation).

When you hire employees, you may want them to sign confidentiality or non-compete agreements.

Business owners also 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.

Drafting Employment and Independent Contractor Agreements

If you have employees, you'll want employment agreements spelling out the terms of the working relationship. You also want to avoid potential employer discrimination lawsuits if you need to discipline or terminate the employee.

Suppose you outsource responsibilities to other people who are not your employees (independent contractors). In that case, you may need a business attorney to draft an independent contractor agreement.

Reviewing Lease Agreements

If you need to lease space for your company, schedule a consultation with or hire a corporate lawyer. Let them review the real estate documents to ensure you aren't signing up for more (or less) than you expected. Attorneys can review your lease agreement for terms that could be troublesome.

Suppose your landlord isn't keeping their promises, which impacts your business. In that case, having your lawyer negotiate more favorable terms or resolve a conflict is useful.

Protecting Your Personal Assets From Business Liabilities

Another significant benefit of legal counsel is that it protects your personal assets from your business activities. Lawyers advise setting up your company so that lawsuits and claims against your business do not go after your personal bank account, home, or other assets.

Avoiding Lawsuits

Lawyers will also review your business operations and advise you on 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, having an attorney knowledgeable about your company in your corner is helpful.

Explaining Tax Advantages

Tax lawyers are well-versed in knowing how businesses can reduce their tax burden. They know all the deductions you can take, and they 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.

Helping 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 help you get authorized to do business in another state or country.

Keeping Your Business Compliant With Federal and State Laws

business attorney stays on top of legal changes on a state and national level. They can advise you of changes to keep your company compliant with current regulations or requirements.

Referring You to Specialists

business attorney can supply you with referrals to other professionals you may need during the course of business. If you trust your lawyer, you will trust their recommendations. They may also have a working relationship with those professionals who can make your matter run smoothly.

Hiring a Small Business Lawyer

Your attorney is integral to your team, so if you decide to hire a lawyer for your business, make sure they work well with you.

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