Starting a small business and don’t have the legal knowledge to make the right decisions?
Well, you are not alone!
As a small business owner, you are swamped with so many decisions that the question of whether you need a business lawyer sounds a little unimportant.
The standard perception is that lawyers charge high rates, and many small businesses don’t have much, if any, extra capital to pay their fees. So, business owners only hire an attorney when confronted with a serious legal problem.
Well, the thing is — having legal advice from the start helps to avoid many mistakes, enabling you to make the right decisions and saving your money and business in the long run.
Common legal mistakes can become costly
Small business owners spend most of their energies and focus on the nitty-gritty, such as marketing their business, managing employees and products, and serving their customers. One area that suffers — legal concerns.
But if you fail to take the proper steps to protect your business legally, you increase the risks to your business.
Many small businesses delay hiring a lawyer until they get into legal troubles, and quite frankly, that’s a bad idea. Once you get involved in legal troubles, it’s already too late — the problem has occurred, and it’s just a question of how much you will have to pay (in court costs, lawyers’ fees, settlements, and other expenses) to resolve your issues.
Andrea Sager, the founder of The Legalpreneur, says that it can be tempting to get any legal template from the internet to use for your business, but you need to understand the legal terms and jargon before you use it. Similarly, many business owners sign contracts with clients or vendors without reading them thoroughly and not realizing that one small provision can make a huge difference.
Another common mistake when people start their business is not having everything in writing. Many small business owners take help from family or friends in the beginning, and under good faith, don’t get proper documentation done. You need to think about the what-ifs and add all the scenarios to the contract to save time and money in case your relationship falls apart.
Mistakes like these can become costly and stressful, and this is where hiring a lawyer becomes necessary and important. They can review contracts and documents that you would otherwise assume are legitimate, and make sure you have contracts for everything in place to help prevent any losses in the future.
Let’s look at how lawyers can actually help small business owners stay on track and protect themselves.
How can a lawyer help your small business?
So far, we have covered some of the common mistakes we have seen business owners make without legal help. For this article, I also talked to several small business owners around me who hired lawyers and scaled their businesses.
Kim Herrington, Creative Director at Orsanna, said, “Having an attorney to help me understand the ramifications of proposed contract terms, prepare alternatives, and help me decide whether or not something was a good choice was one of the key reasons why my business grew as quickly as it did. If I hadn’t had that guidance, I’d probably still be running a one-woman show.”
Now let’s dig more into how hiring a lawyer helps you stay on the right side of the legal track and helps you scale your business.
Your lawyer can help make sure that you open and operate your business according to federal, state, and local laws. Specifically, this can ensure you’re not infringing on other businesses in regard to trademarks and copyrights.
When it comes to running a business, there are a lot of risks involved. Every new business comes with a different set of risk levels involved. With an attorney by your side, you can have a set of procedures and contracts that limit the risks and protect your business.
You might not know a lot of legal jargon, (I don’t!), and sign some contracts that make you liable in the event of a legal claim. Your lawyer can help define business terms of service and contract language that minimize or restrict your liability in more ways than one.
Your lawyer can help you with formal legal documents that regulate relationships across the business. Through proper documentation, you know what you owe to your partners (if you have any), employees, vendors, customers, or clients, and their deliverables in return.
Some lawyers trained in taxes can help ensure that you pay the tax you owe on time. They can also help lower your tax liability by identifying business deductions and reimbursements.
When is it time to hire a lawyer for your small business
Now that we have covered all the ways a lawyer can help your small business, let’s see when to hire a lawyer and get legal advice.
Chris Brown, the founder of Pixel Law, says the earlier, the better. “Not every risk requires engaging a lawyer to evaluate the risk and mitigation strategies. But as the risk increases, the need for one-on-one legal advice increases”, he said.
I will list down seven ways a lawyer can help you set and run your business so you can decide the best time for you to get legal help.
- Choosing a business entity
It can be overwhelming to decide what type of business structure you want when starting (especially if you don’t know much about the differences). A lawyer can help you decide between a Limited Liability Company (LLC), a sole proprietorship, partnership, or corporation based on the size and nature of your business, the taxes, liability, and legal pros and cons of each.
You can refer to many legal self-help resources available on the internet, and for most startups and small businesses, you can choose a business structure this way. But if you are not sure what form of business is best for your startup goals or have multiple investors and partners, it’s better to consult with an attorney. They will help you explore the pros and cons of different business structures and make the right decisions.
- Picking a business name
Picking a business name is fun, yet overwhelming. You want to make sure it’s not already in use by another business, or that a similar name is not already in use. A lawyer can perform the research required to ensure that the name you decide for your business isn’t trademarked or in use by another company.
If you skip this research and select a name without making sure it’s available, you might start operating under an already trademarked name which can cause financial and legal problems down the road, due to trademark infringement.
- Forming your business entity
Now that you have selected the name and type of business structure you want, what’s next is to register your business formally. A lawyer will help you create necessary agreements and file certificates of incorporation. These are the necessary documents needed for you to operate your business.
In addition to registering your business entity, you will also need to create an operating agreement if you are forming an LLC, or bylaws if you are starting a corporation. These are internal documents that help you lay out the rules and procedures for your organization. Your lawyer will help you with all these documents and guide you through the process of documentation.
- Creating contracts
As a business owner, you need to take all the actions necessary to protect yourself and your business. So, no matter how well you know someone, you should have a contract to protect your interests.
Your lawyer can safeguard your business by preparing bullet-proof contracts for vendors, suppliers, employees, and other entities your business engages with. Your lawyer will also help you review and respond to contracts that other parties want you to sign.
- Have licenses and permits
Depending on your business, you might need some licenses and permits to set up shop. Your lawyer will also help you with relevant documents, including general business and trade-specific licenses, zoning permits, and other documentation.
- File patents
If you have a patent, your lawyer will advise you on keeping your patent confidential and help you file the patent application. They will also do all the research to avoid duplicate patents already filed with the US Patent and Trademark Office.
Filing a patent is a little complex, and making a mistake in this area can be costly. So, it’s important to have a lawyer guide you through this process.
- Protect intellectual property
Every business should trademark its logo and other identifying brand marks. Your lawyer can help you register your products and services for federal trademark and copyright protection.
Krittin Karla, the founder of WriteCream, recommends every small business owner to have a lawyer in their corner. He says, “I was able to get legal advice when I needed it and be able to spend more time focusing on my work and not worry about the legal side of my company which helped me tremendously.”
How can The Legalpreneur help your small business?
Legal jargon, federal, and state laws intimidate many small business owners, and it shouldn’t be this way. This is where The Legalpreneur steps in.
The Legalpreneur is your one-stop shop for all your legal needs and guidance. You can access legal resources that fit the small business owner’s budget, save time searching for the legal know-how to protect your business, focus on the more crucial elements of your business, and access industry-specific contract templates your small business needs.
With The Legalpreneur, you know someone is always in your corner to answer all your legal questions and help you at every step of the way. You also connect with other small business owners and learn from their expertise.
The Legalprenur Membership gives you everything that small business entrepreneurs like you wish to have to get started with legal documentation, protecting your business, and maintaining compliance. Andrea, the owner of The Legalpreneur, has curated this membership with small business owners in mind — making it affordable and accessible.
Start getting affordable legal advice today!
Starting a business is hard work, and you may not know you need legal help until it’s too late. Many small business owners step into the business world without any legal know-how, and the best way to protect yourself and your business is by hiring a lawyer. If you want to get access to a lawyer, legal guides, and training, along with a community to rely on, get The Legalpreneur Membership today!