You’ve taken the monumental step of starting your own business. Whether you’re launching a tech-savvy startup or selling T-shirts online, there are countless new responsibilities that come with running a small business. One question that every new entrepreneur will consider: Do I need a business lawyer?
What does a small business attorney do?
First and foremost, you should understand what a small business attorney does. This way you can determine if hiring one is the right decision for your company. Lawyers for small business owners typically handle issues such as taxation, intellectual property, and business contracts, agreements, and transactions. Other examples of what a small business attorney does include: drafting and review of real estate agreements and contracts between buyers and suppliers; drafting and review of operating agreements between partners; research and analysis of environmental and other governmental laws and regulations; and the pursuit of defense of employee or lawsuit from an employee. Small business attorneys can handle everything from routine paperwork to court lawsuits – it’s up to you to decide how much involvement is right for your company.
There are three main considerations when determining how much involvement a lawyer should have in your business.
- Your need: How complex is your business? Are you facing any serious issues such as a lawsuit or environmental issue?
- Your time: Do you have the time to learn or deal with the legal aspects?
- Your budget – What can you afford? It’s important to realize that legal advice today could save you thousands in the future.
It’s time to hire a lawyer for a small business when…
You have a serious issue
Serious issues include:
- Lawsuit: You’re being sued by an employee for discrimination or a hostile work environment;
- Laws and Regulations: Your business is facing potential fines and penalties for alleged violations of environmental regulations or is being investigated for alleged violations of the law;
- Negotiations: You’re negotiating the sale of all or part of your business and/or its assets or are acquiring another business;
- Tax reasons: You and your partner(s) want to make a “special allocation” of profits and losses in your partnership agreement or LLC agreement OR you want to contribute appreciated property to a partnership or LLC
You want to prevent serious issues
Some things an experienced business lawyer can help you with:
- Contracts: Negotiate contracts for buyers, suppliers, employees, etc. This will help avoid lawsuits and disagreements down the road;
- Intellectual Property: Register products/services for federal trademark and copyright protection. You don’t want to mess this up and end up without a necessary trademark or copyright. You could face some heavy fines and backlash down the road;
- Real Estate: Commercial leases are more complex than residential leases and it is useful to have an experienced lawyer negotiate the terms or at least advise you concerning what to look for in the lease.
- Taxes and Licenses: Advise you concerning the tax consequences of planned business transactions resulting in substantial savings to you and your company;
- Business Organization: Assist you in structuring your business to maximize its profitability and minimize its tax exposure. You can approach this one on your own but, if you don’t know the ins and outs of different business organizations. It helps to have some guidance.
You need more time to focus on your business
Running a business, never mind starting one, is time-consuming. You might find that you can’t do everything or learn everything on your own. This is a good time to invest in a lawyer and take some of the weight of your shoulders. All the time you would have spent researching and learning about different legal processes, forms, laws, regulations, and more can now be invested in growing your company. So if you aren’t getting any sleep and you still can’t get everything done, an attorney might be just what you need to get the wheels turning. Remember, you don’t have to hire a lawyer to do everything, but consulting a business lawyer can save you hours of research and stress.
Consulting a business lawyer is always an option
If you don’t have the money for a lawyer or need to pour your money back into your business, then there are countless online resources you can use to get the information you need. It’ll take time to research the right steps for you, but it can be done. If you’re really stuck, you can always consult with a lawyer. Consulting a business attorney concerning matters or legal processes you don’t fully understand, in advance, may help you avoid hiring an attorney down the road, when a solution is not as simple or inexpensive. Many firms offer free consultations and, in some circumstances, that may be all you need.
Obtaining legal advice concerning the best way to approach a situation, but actually doing the legwork and paperwork yourself, might be the best option for a brand new startup with a savvy founder, but a tight budget. Just remember – when in doubt, find out! A gamble on a big legal decision could end up costing you and your business down the road.
In the end, it’s really your call, but a good rule of thumb is to not enter any legal decision, agreement or contract unsure of the outcome. If you can’t afford to hire a business lawyer, consulting one is always a great option.