Do I Need A Lawyer To Start A Business?

Are lawyers necessary for business startups?

Although you do not need a lawyer to start a business, it is a good idea to speak to one. Entrepreneurs are accustomed to being a jack-of-all-trades, after all. But many business owners make the mistake of trying to do everything themselves. Trying to manage complex legal matters robs them of valuable time they could be devoting to building their business, and it slows their progress. The most successful entrepreneurs have a keen understanding of their talents and what tasks they can and should outsource to others especially a lawyer to start a business.

One of the most common entrepreneurial traits is delegating tasks to others, thus freeing up time for other important duties. The critical point is knowing what tasks to assign to others.

When considering hiring a small business lawyer to start a business, first make a list of the steps required to start the venture and assess who is best-suited to performing each. You should keep in mind that there are some important reasons why you may need a lawyer for your business.

What can you do without the help of a lawyer?

There are many things you can do to start a business without a lawyer. Indeed, you can handle certain tasks on your own. The question you need to ask yourself is whether it is a good use of your time when starting a business.

Create a business plan

A business plan is an important step when it comes to organizing one’s ideas. Also, before giving you money, investors and banks will want to study your project. Thus, an in-depth analysis of your business can help to secure funding from investors and banks.

A business plans opens with a mission statement before proceeding to outline the structure of your company. Here you should identify your customer base, market, business challenges and opportunities, profits, projected costs, as well as plans for funding. There are many online templates that you can employ to create a draft of your business plan.

An attorney to start a business can look over your business plan and highlight any gaps or causes for concern. They can also draft the business plan for you. Because of the important of a business plan in securing loans or investors, it may be worth the investment to have a lawyer look it over.

Choose a business name

Choosing a business name is definitely something you do not need to hire a lawyer for when starting a business. A company’s name is an important part of the brand you want to develop. After all, you are creating the image you want your enterprise to reflect.

Before settling on a name, you should perform an internet search and check the Secretary of State’s database to make sure that no one else is using the name. You do not want to be accused of trademark infringement. Also, you should choose a name you can trademark and use as the domain name of your website. If you cannot tell whether a name is available, an intellectual property lawyer can perform an in-depth trademark search.

Register your name

After you have decided on a name, you should then register it under a “doing business as”, or DBA, with your local jurisdiction or state. Depending on the location of your business, fictitious name registration has other requirements. You do not need a lawyer to start a business just to register your business name.

Apply for an EIN

You do not need a lawyer to start a business just to applying for an EIN which you can do yourself. After you pick your corporate structure and register it with the Secretary of State, the next step would be applying for an EIN, or Employment Identification Number, under your company name. This taxpayer identification number can be used to open bank accounts, pay employees, pay for loans, as well as file your company taxes.

Open a bank account and manage accounting

Needless to say you do not need a lawyer to start a business just to open a bank account. To pay bills and receive income, you should open a bank account under your business name. The bank will ask for the name of your business, your EIN, as well as articles of organization or incorporation (if you run a corporate entity).

Related to this, you can manage all your invoicing, bookkeeping, and accounts payable on your own. For this, you do not need to hire an attorney for general business operations.

Apply for business licenses and permits

Entrepreneurs should be aware of all regulatory requirements. When you start a new business, you will need all the required permits and a business license in order to run your company.

To apply for a business license, contact your city or state. Every jurisdiction has its own requirements and rules. Applying for business licenses and permits can be tricking so you may want to hire a lawyer to start your business.

You can look up what federal, state, and city permits are required to operate your company by getting in touch with your local business license agency and looking online. You should be able to complete and file the paperwork on your own unless your business activity is subject to unique federal regulations.

What can a lawyer do for you?

Choose the best business structure

A business owner will be able to file their corporation paperwork with the Secretary of State using online forms. This does not require the help of a lawyer to start a business. However, the owner must first choose the appropriate corporate structure for their business. There are a lot of factors to take into account, especially liability protection and tax advantages. Further, if you want to have shareholders or partners, it is important to select the proper corporate entity.

Perhaps the best advice a business lawyer can give you is how to properly set up your business to minimize your liabilities and taxes. A lawyer can show you the pros and cons of your business structure to choose the right one for your situation.

For instance, let’s say you run a business with a partner. In this case, a lawyer will speak with about creating a corporation, an LLC, or a limited partnership. All of these options could work for your situation, but the lawyer will be able to suggest the best choice for you.

It is worthwhile retaining an attorney to help with the initial stages of setting up a corporation. Selecting an inappropriate corporate structure is an expensive mistake that you so not want to make.

Draft partnership agreements

Many entrepreneurs begin their enterprises with a partner where each individual contributes a specific talent. A business attorney to start a business can create a partnership agreement that outlines each individual’s responsibilities and rights.

Just as important is looking at how a partnership may change as the company grows. Perhaps one partner will want to exit the company, for example. For this, retaining the services of a lawyer to start a business will help preserve the relationship and avoid conflicts down the road.

Protect intellectual property

If you create an invention or product, you should be sure to patent your creation. If you have a logo, brand name, or slogan, you should protect it using trademark law.

To protect your ideas and your brand, you should hire an intellectual property lawyer. Unfortunately, it can be time-consuming to research trademarks, patents, and copyrights. There is also the matter of filing applications. Your time would be better spent developing your brand and products, rather than studying the complexities of intellectual property law.

Draft contracts and agreements

A business lawyer to start a business can assist you with drafting agreements and documents for your company. For instance, when you begin your company, you may require bylaws or an operating agreement. When you hire employees, it may be necessary to have them sign non-compete or confidentiality agreements.

Also, business owners often use delivery agreements, equipment leases, and sales contracts. Having a lawyer look over these documents and represent your interests can save you trouble and time down the road.

Draft independent contractor and employment agreements

If your company has employees, you will want to have employment agreements in place that detail the terms of the working relationship. Also, you will want to avoid possible lawsuits if you need to terminate or discipline an individual working for you. Hiring a lawyer to start a business and draft employment agreement is necessary to ensure your company complies with employment laws.

If you decide to outsource duties to people not in your employ (independent contractors), then you may require a business lawyer to draft an independent contractor agreement.

Review lease agreements

If you lease space for your business, it is a smart decision to hire a lawyer to start a business by analyzing the lease documents to make sure you are not agreeing to more, or less, than you agreed to. Also, lawyers can examine your lease agreement, looking for potentially troublesome terms.

Let’s say your landlord is breaking promises that impact your company. If this is the case, it is helpful to have your attorney negotiate for you. Also, you may be able to get terms that are more favorable to you.

Protect personal assets from business liabilities

One major benefit of having a lawyer to start a business is a lawyer’s ability to protect your personal assets from your business activities. Lawyers can help you set up your business so that claims and lawsuits against your company do not put your bank account, home, and other assets at risk.

Avoid lawsuits

A business startup lawyer can analyze your business operations to give you advice on how best to avoid liability issues and lawsuits. For instance, they may craft disclaimers or warnings for products. They may also draft company procedures and policies for employees to follow.

If someone files a lawsuit against your company, it can be helpful to have a lawyer who knows your company on your side.

Explain tax benefits

Attorneys are familiar with the ways businesses can mitigate their tax responsibilities. They are aware of all the deductions a business owner can take. They can also help in the event of an audit.

Tax attorneys can also help develop business strategies to reduce taxes. For instance, they may recommend expanding or launching your company in one state versus another. Thus, you may save thousands of dollars in taxes by paying a couple hundred in legal fees.

Help expand your business

Let’s say you want to operate your company in another state or country. If this is the case, you need to follow certain government rules and get permits. A lawyer to start a business can help you navigate the process of getting authorized to conduct business in another state or internationally.

Keep your business compliant with state and federal laws

A business lawyer stays updated about changes in state and federal laws that may impact your company. Thus, they can give you advice about keeping your company compliant with current requirements and regulations.

How to find the right lawyer for you

Your lawyer plays a central role in your business team, so you should find someone you connect with who understands your field. One of the questions you should be sure to ask when interviewing potential business lawyer to start a business is their hourly fee and the kinds of companies they help.