Unless you start your business as a sole proprietorship, you'll normally need an attorney's help to prepare a partnership agreement or set up your legal business entity. Most experts also recommend consulting with an attorney to make sure you obtain the necessary licenses and permits for your type of business.

In general, an attorney can help:

  • Determine which type of corporation to form (S-Corporation, C-Corporation, or Limited Liability Company). Keep in mind the legal requirements for maintaining a business don't end with incorporation; there are also ongoing legal requirements you must meet to maintain corporate status. Corporations must hold shareholder and director meetings, take minutes of those meetings, and file annual updates with the appropriate state authority per state requirements. While this process is often a formality, failing to meet the requirements in your state could put your business' corporate status at risk and expose you personally to liability or other legal issues.
  • Protect intellectual property. Your business owns tangible and intangible assets. Your company name, logo, product names, and unique products or services may also be eligible for protection under copyright laws. Unique advertising materials and slogans may be eligible for trademark protection. And if you invent new products or methods, that intellectual property may be eligible for patent protection. Copyrights, trademarks, and patents can help you protect and maintain your competitive advantage.
  • Agreements. Contracts are not only made between you and your customers; in some cases, an employment contract may be extremely useful. Your employees are a tremendous asset. You can help protect that asset using non-disclosure agreements and non-compete agreements. A well-structured non-disclosure agreement can help you maintain your competitive advantage when employees leave the company. A non-compete agreement can protect you from employees who leave your business in order to compete directly with you. Some employment agreements are enforceable and others are not; a lawyer can help you craft agreements you can rely on.
  • Develop an effective exit strategy. What happens when you or a partner decide to sell your share of the company, or if one of you dies or becomes incapacitated? Establishing exit strategies allows you to control what happens to that ownership stake. Not only can you make sure you are able to buy back those shares, or have a say in who buys those shares, but you can also establish terms that minimize legal issues or help reduce financial risk. It's natural to think about how to best start a business; don't forget to consider what happens when your company matures.

Most legal problems that impact small business are the result of actions taken or not taken in the absence of professional legal advice. In short, an attorney can help you comply with the law, check out business opportunities, prepare legal documents, negotiate deals, and file or defend against a lawsuit.

So how do you find the right attorney for your business? Bar associations can make referrals, but they will not be able to provide specific information about any of their members. Your best option is to get recommendations from other small business owners or from professionals like accountants and bankers. Create a short list of candidates, and then make appointments to evaluate the people you feel most comfortable working with.

Questions you should ask include:

  • What is your background and experience with businesses like mine? Look for an attorney with experience in your industry, your market, and your business type.
  • Will I always work with you, or will I be assigned to other attorneys in your firm?
  • How will I be charged? Attorneys bill both on an hourly basis and by the service rendered; for example, you may pay $150 per hour for a consultation and a flat fee of $1,200 for setting up a corporation. Legal fees can add up quickly; make sure you know how you will be charged.
  • Do you currently represent my competition? Conflicts of interest or of representation are not likely to arise, but it never hurts to be sure.

Attorneys are like most other professionals; many specialize in different types of law. Don't be afraid to "shop around" for an attorney with the right blend of experience, skills, and personality. Your goal is to not only find a lawyer who can provide great advice and counsel, but also one you will feel comfortable working with over the long term.

 


The information provided is presented for general informational purposes only and does not constitute tax, legal or business advice.