An ounce of prevention is worth a pound of cure, or so the old proverb goes. It rings very true when forming a business. Taking on a new business venture can be so exciting that owners forget to protect themselves in an effort to open the doors as soon as possible. This is where a good business attorney can save you time, money, and litigation from the outset for the duration of your business’ life. Here are the top eight reasons to spend the extra money to hire an attorney to form your business.
1. Structure. There are several different business structures that will determine the way your business will operate. Structure affects everything from how taxes are paid to how investors can provide funding.
2. Liability. Most business owners want to minimize personal liability for business related dealings. You can protect yourself by having your attorney draft your documents and advise you on what structure is best for
3. Partnerships. If you are partnering with another entrepreneur, an attorney can help protect your interests should something go awry. Like divorce, partnerships are usually wonderful in the beginning, but sadly some sour over time. Having an attorney consider the negative possibilities in the beginning can protect your interests in the end.
4. Dissolution. An attorney can help you determine how to keep control of your business if a partner resigns, retires, or passes away. Likewise, your attorney can help you decide what will happen to your share of the business if you retire or pass away.
5. Documents. Articles of incorporation, partnership agreements, bylaws, oh my! The internet has thousands of templates of any of these. Proceed with caution when not using an attorney. Unless you have a strong business background, chances are you may miss a document you need, thus opening yourself to personal liability, or use a document that does not reflect how you want your business to operate. Never sign something you do not fully understand, including a template you pulled from the internet.
6. Questions. As mentioned above, you can get all kinds of templates online, but there is no one to ask questions when you do not fully understand what the documents mean. It is imperative you fully understand the ins and outs of your business for liability and general operating
7. Licenses. Your attorney can help you obtain all the licenses you need depending on your business type. You may need local, state, and federal licenses or permits to be complaint with legal requirements. Fines are a waste of your business’s precious resources; avoid them up front by
discussing what you need with your attorney.
8. Contracts. Most of us know someone who failed to read the entire contract and ended up losing money as a result. Language in contracts can be complex and having an attorney review the document before you sign it can save you money should a problem arise with the third party.
By Amber Hardy
Amber Hardy is owner of Lotus Legal Services, a law firm that caters to entrepreneurs.