When your business is just getting off the ground the last thing you want to do is spend money unnecessarily.  Many small business owners see legal expenses as unnecessary.  That means that many attempt to do things without consulting an attorney and, unfortunately, can find themselves in hot water farther down the line.  The last thing you want to do is end up costing yourself even more money—or even the business itself—because you failed to properly prepare yourself.  Instead, consult with a qualified attorney before you find yourself in a jam and save yourself the headaches.

But when do you need an attorney and when can you handle things yourself?  It’s a hard question to answer. Below you’ll find 10 reasons when your new small business might need to hire an attorney.

Creating Partnerships

When small businesses are starting up what they need most is capital and human resources.  Partnerships can bring both of these valuable resources into the fold, but how do you go about doing so?  Partnerships—whether you go to a lawyer for help or not—are legally binding relationships that define each party’s responsibilities and shape the very core of the business you’re building from the foundation up.  While you might think a simple handshake or a document you’ve created yourself will suffice, it’s best to have your partnership agreement crafted or at least reviewed by a business lawyer to ensure you don’t miss any loopholes or create a situation where your business is hanging in the balance.

Incorporating

Incorporation is a legal process through which you establish your business ass a business rather than an extension of your own personal finances.  While you can attempt the incorporation process yourself—your local government can help you find and file the right forms—it’s often a good idea to consult with an attorney beforehand to ensure that you create the right type of incorporation for your business.  While most businesses can get by as simple LLC (Limited Liability Corporations), others may want to consider S Corporations.  The differences may seem subtle at first but they have far-reaching implications.

Choosing a Business Name

Your business name is essentially the distillation of your business. It affects everything from your branding right on through to your signage and packaging.  You want to do your research and ensure that your business name isn’t already in operation somewhere else—or you can have an attorney do the research for you—to avoid facing a cease and desist order.

Trademarking Terms

A trademark can be a valuable business tool that safeguards your profit from the competition.  However, applying for a trademark can be a bit tricky.  You have to first research the term to find out if anyone else is using it anywhere in The United States.  Then you have to file the paperwork, pay the fees, and wait for the government to do its thing.  If you’ve messed up any one of the steps along the way, you’ll receive a negative notification and have to start the process all over again.  Hiring a lawyer to do the legwork for you can save you the hassle of getting it wrong the first time.

Hiring Employees

There are multiple considerations when it comes to hiring your first batch of employees.  Employees enjoy favorable legal status under local and federal law.  You not only have to know these laws, you have to abide by them as well.  Indeed, even something as simple as creating an employee handbook can feel like walking through a midfield if you’re not familiar with employee law.  Then comes the employee classification, the record keeping, and the taxation.  It can be a bit much for a small business owner to handle when they are struggling to get their operation up and running.

Earning IRS Classification

You have to file certain paperwork with the IRS when you’re a business owner—such as applying for an EIN (Employer Identification Number).  If you’ve ever tried to do your personal taxes yourself you know how much of a hassle that can be.  Now imagine layers upon layers of business litigation and tax law piled on top.  A lawyer can definitely smooth the way for you and help you avoid fines and penalties come tax time.

Creating Contracts

Whether you need a contract for a partner, a contract for your clients, or a contract for a third-party service provider (such as a freelance marketer), you’re going to want ironclad language in that contract.  Something as simple as a poorly chosen word can create a legal loophole that destroys any chance you may have of enforcing said contract.  If you insist on “saving yourself money” and creating your own contracts piece together from examples online, at least have a lawyer look over the finished document before your contractee signs on the dotted line.

Acquiring Licenses and Permits

Depending on the type of business you’re starting, you may need a variety of licenses and local permits to prevent your business from getting shut down after its first inspection.  However, licensing laws can be a bit hazy and hard to understand.  While your local business office can help you wade through the paperwork, it’s often simpler to hire a third-party legal expert to walk you through the process.

Lawsuits

No business owner wants to be the victim of a lawsuit, but chances are that if you’re in operation for any length of time you’ll have to deal with at least one.  From wrongful termination suits filed by former employees to product liability lawsuits filed by customers, you need to defend yourself.  While many small business owners opt to settle out of court (to avoid bad publicity or just to “simplify” the process), often going to court and fighting for your rights can have a better outcome.  However, you’ll need a lawyer on your side—it’s never advisable to enter a courtroom without one.

Entering Into a Franchise Agreement

While many small business owners see entering into a franchise agreement as a fast track to getting a business up and running, national or even local franchises come with a lot of responsibility (not to mention legal documentation).  It’s always best to research any potential franchise as thoroughly as possible and that includes going over every document with a fine-toothed comb.  If you fail to do so, you may very well misunderstand your obligations to the franchise and find yourself on the outs before you even get up and running.

Finding a Lawyer Doesn’t Have to Be Expensive

While the common conception is that legal advice is costly, it doesn’t have to be. Upcounsel.com provides you and your business access to legal experts across the country for a fraction of the cost of hiring a local law firm.  This service connects you with experts that can charge lower rates because they don’t have the financial overhead of big (or even little) firms and they don’t have any quotas of numbers obligations to their bosses.  But that doesn’t mean you miss out on any of the expertise.  In essence, you’re getting the same service for less from the convenience of your own home or office.  And you don’t have to pay outrageous retainers just to speak with an individual either.  So don’t let the imaginary cost of hiring a legal expert keep you from getting the help you need.

About the author

Matt Faustman

Matt Faustman

Matt is the co-founder and CEO at UpCounsel. Matt believes in the power of online platforms to change antiquated ways of life and founded UpCounsel to make legal services efficiently accessible. He is responsible for our overall vision and growth of the UpCounsel platform. Before founding UpCounsel, Matt practiced as a startup and business attorney.

View all posts

Post a Job on
UpCounsel and get
high quality legal work done

Post a Job on UpCounsel
Shares
/* ]]> */