Starting a new small business, your first step should be hiring a business attorney to guide you through the process. This article looks at how a business attorney can be an asset, and how they can help you avoid mistakes.
If you’re launching a new startup or small business, one of your first responsibilities is to build a team of advisors. Often, however, cash-strapped entrepreneurs cut corners. To save money, they often drop the idea of hiring important team members such as business attorneys. This can be a risky move, however, considering how affordable lawyers for startups can be.
An attorney at business law can be a critical member of your advisory team. Such lawyers have exposure to the challenges and pitfalls that first-time entrepreneurs navigate, and bring an understanding to the enterprise, of the best ways to sidestep them. An attorney needs to be brought on board early in the process of building a startup — typically, before you set up the foundations of the business. The advice that your lawyer gives you at this stage can strengthen your chances of success over the long term.
As you start up your new business, it’s important to pay attention to a number of issues early on. For example, you need to make a decision about the kind of business structure to adopt – a C-corporation, an S-corporation, a limited liability company, or a hybrid structure, among other options. The number of entrepreneurs there are behind your startup, the kind of liability your business has, the profits your business believes may be possible, and the licensing rules that apply, are all important areas to pay attention to, in order to settle on an entity that gives you the greatest possible tax savings and asset security.
Building up your startup from scratch, your lawyers can also advise you on the kind of equity splits to adopt in order to avoid problems later on. For instance, many startups simply divide ownership among the entrepreneurs involved in specified percentages, depending on the contribution of each individual. This kind of division, however, can be problematic if you need to bring new investors on board at a later point. Planning ahead with the help of an experienced attorney at business law, however, your startup could assign a certain number of shares to current owners, making it more convenient to raise capital in the future.
It’s also possible, before shares in the business are assigned to the founders, to set down a vesting schedule. This can make it possible for the founders to gain ownership of their stocks over several years. It’s important to recognize the specific circumstances in which such a schedule would be advantageous.
Even once the requirements of a well-thought-out formation are attended to, there are often other issues that need to be dealt with. For example, you would need to negotiate and formulate employment contracts, sales agreements, and rental leases. You would need to work out how to safeguard your intellectual property and brand, turning to trademark protections, if needed.
The federal and state laws that govern employment can be burdensome, as well. From awareness of forbidden subjects in job interviews, to making sure that your choices of people to hire do not invite allegations of discrimination, an experienced business lawyer can help you avoid legal challenges.
Finally, a lawyer can be an invaluable ally in your efforts securing the services of professionals such as CPAs.
Whether you need to start a new business or buy an existing one, you need to understand the legal implications involved every step of the way. A business attorney can be your go-to source for dependable counsel and information.