Is An Attorney Essential When Starting My Business?

Is An Attorney Essential When Starting My Business?

Embarking on the journey of starting your own business can be quite intimidating due to the inherent risks and investments involved. Numerous tasks must be accomplished before your business can officially commence its operations.

Therefore, it becomes crucial to seek guidance from experienced professionals who can assist you in laying a solid foundation for your business venture.

To ensure that no important aspects are overlooked, it is highly recommended to create a comprehensive checklist that covers all the essential elements of starting a business.

Business and commercial lawyers possess the expertise needed to assist with business start-ups. They can prepare a well-crafted business plan that increases the likelihood of your project thriving!

We have thoughtfully compiled a comprehensive “checklist” for an optimal business launch and can provide referrals to qualified lawyers specializing in this field.

Is an attorney essential when starting my business?

The necessity of hiring an attorney when initiating a business largely depends on the legal structure of your business endeavor.

The simpler your business structure, the less likely you will require the assistance of an attorney.

A sole proprietorship

Being the most straightforward form of business, does not mandate business registration with the state. Therefore, for this type of business, the need for an attorney is generally unnecessary.

Only local business licenses may be required, and even these requirements can vary based on the nature of your business and specific regional regulations.

Partnerships and limited liability companies (LLCs)

Partnership and LLC must register with the state and prepare relevant documents such as partnership agreements or LLC operating agreements.

Although you may be able to complete the registration process online or utilize online services, it might be advisable to engage an attorney if your business structure entails any complexity.

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Corporations

Corporations, including S corporations, also need to register with the state. They must create bylaws and handle a more intricate ownership structure.

In all likelihood, legal assistance from an attorney will be indispensable in initiating any form of corporation.

An S-corporation begins as a corporation and then elects S corporation status with the Internal Revenue Service, a process that can be quite intricate. Seeking professional help is highly recommended.

10 reasons why an attorney is essential when starting a business

Outlined below are the top ten reasons why hiring an attorney is crucial during the initial stages of starting a business:

1. Setting the stage for success

Every entrepreneur desires the success of their business. The substantial time and effort invested in building a business from scratch make it essential to take measures that ensure its long-term survival.

Employing a business lawyer is a pivotal step toward positioning your business for success. Since the challenges your business may face in the future are unpredictable, it is crucial to be prepared for worst-case scenarios.

By taking proactive steps, such as engaging a lawyer, you can address potential challenges beforehand.

2. Establishing connections with investors

Lawyers frequently interact with a diverse range of individuals, some of whom may be willing to introduce you to their network, benefiting your business.

Apart from minimizing risks, an attorney can help you maximize value by informing you about specific tax benefits associated with different types of incorporations.

They can offer guidance on capital gain taxes and utilize their previous experiences to introduce you to angel investors and venture capital sources.

Establishing relationships with proven financial backers can greatly contribute to securing funding and achieving a higher business valuation from the outset.

3. Preventing mistakes before they escalate

Many entrepreneurs, in their eagerness to launch their startups and establish a market presence, often neglect to consider potential legal issues or assume that they can be addressed at a later stage.

However, deferring legal matters can lead to increased expenses in the future.

For instance, founding a startup as an LLC and subsequently changing it to a Delaware C corporation can be more costly than initially selecting the correct business structure and completing the necessary paperwork.

Avoiding such mistakes can save you significant time, money, and effort.

4. Early avoidance of legal problems

Numerous small business owners tend to seek legal assistance only when they encounter problems, such as lawsuits or issues related to sexual harassment, wrongful termination, and other litigious matters.

It is prudent to consult an attorney before any trouble arises to ensure compliance with corporate employee rights in the workplace.

5. Protection of interests:

Many startup founders lack comprehensive knowledge of the legal requirements involved in initiating and operating a business.

For instance, when establishing an LLC in New York, the legal obligation to announce it through newspaper notices may not be apparent to all entrepreneurs.

Noncompliance with such requirements can prove costly, both in terms of media expenses and potential legal consequences.

A proficient lawyer, particularly one well-versed in state laws, can keep you informed about essential obligations and minimize associated risks.

6. Completion of required paperwork

A business lawyer can assist you in fostering and maintaining strong relationships with customers, clients, partners, and suppliers by facilitating the creation of appropriate communication channels.

When presented with agreements and contracts, a lawyer can review them on your behalf, ensuring legal compliance and safeguarding your interests.

It is also beneficial to establish standardized contracts for tasks such as employee hiring, firing, and compensation, as well as board member and advisor recruitment.

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7. Tax guidance

Seeking the counsel of a business lawyer or tax lawyer can help ensure compliance with regulatory tax laws applicable to startup businesses.

They can aid in establishing a suitable tax structure, obtaining necessary licenses, and providing advice on the tax implications of various business investments and prospective deals under consideration.

8. Safeguarding intellectual property

If your product or service is innovative and unique, protecting your intellectual property rights becomes crucial.

This is particularly relevant for individuals working in creative fields like design. Seeking assistance from a trademark, patent, or copyright lawyer can help address intellectual property-related concerns.

Whether you are currently developing intellectual property or plan to do so in the future, engaging an intellectual property lawyer will ensure that your work receives adequate protection.

9. Facilitating fundraising

Inexperienced entrepreneurs often assume unnecessary or unconventional liabilities, diluting equity or distributing it excessively.

Before finalizing any agreements, consulting with a lawyer is advisable to ascertain their soundness.

This can help you avoid pitfalls set by investors seeking to exploit your lack of expertise.

10. Preparing for company investigations

In certain circumstances, a company founder may find themselves embroiled in legal trouble, prompting a federal government investigation. Issues can arise from CRA filings, financing laws, securities regulations, and various other factors.

A business transactional lawyer possesses the necessary experience to guide you through the complexities of such legal challenges.

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How to start a business

To initiate a business, you need to follow a few key steps, including:

Developing an idea

The initial step in starting a business is to conceive a viable idea. Although this may seem obvious, it is essential to have a clear vision of your business before proceeding. Once you have an idea, you can conduct feasibility research and formulate a plan.

Securing financing

Determine the amount of capital required to commence your business and explore potential funding sources. Options include seeking investments, securing loans, or utilizing personal savings.

Creating a business plan

Draft a comprehensive business plan outlining your goals, strategies, and the activities necessary to achieve those goals. This document will serve to attract investors and aid in securing financing for your business.

Registering Your Business:

After finalizing your business plan, register your business with the appropriate government authorities. The registration process varies from country to country. Additionally, you will need to register your business with the local government and obtain any necessary business licenses.

Hiring employees

If your business requires employees, familiarize yourself with employment laws and insurance requirements. This includes obtaining workers’ compensation insurance and fulfilling obligations related to unemployment taxes.

Developing your product or service

Dedicate time and effort to develop a high-quality product or service that forms the core of your business.

Launching Your Business: Once you have developed your product or service and completed the necessary registrations, you are ready to launch your business. This exciting phase involves opening your doors to customers and initiating sales.

Hiring an attorney to assist with starting a business will provide valuable support throughout the legal procedures involved.

Conclusion: Is an attorney essential when starting my business?

Getting business advice and legal help from a small business lawyer is a smart way to start a business off on the right foot. But don’t lose touch with your lawyer once your business is up and running.

Make it a habit to seek business legal advice regularly to ensure that you are protecting yourself as your business grows and changes.

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July 17, 2023
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