Starting a business is a lifelong dream for many, but most new business owners fail to realize the amount of work and resources it takes to turn that dream into a reality. The fact of the matter is that 20% of small businesses fail in their first year, and by year 10, 70% have shuttered their doors for good.
While capital may be scarce in the early stages of starting a business, hiring an attorney that specializes in these matters is one of the best financial and strategic moves you can make. A good startup attorney can save you tons of money in the long-run and can set you up more efficiently than a general practitioner. In addition to this, there are many other reasons that you need a lawyer for your startup.
- Structuring your Business: Business ownership can take many forms, from small sole proprietorships to large enterprises, and everything in between. But do you know if you need to establish an LLC or S-corporation? Do you know if your business needs bylaws? Business attorneys can help you to understand the nuances between different types of ownership structures, their tax rates, and any other information you may need to make the best choice possible.
- Registration: Businesses often require licenses, permits, and registration documentation. Some may also need trademarks and patents. These activities often involve wading through red tape and working through complex documents written in legalese. Having an attorney do this for you frees up your own time and ensures that you are meeting all of your requirements before any deadlines have lapsed.
- Taxes: This is one of the most frequently-cited benefits that a business attorney can bring to the table. They understand the different tax advantages and disadvantages that exist for startups, depending upon their unique circumstances – which can sometimes result in a greatly reduced tax burden.
- Capital: As your business grows, you may need more working capital. Getting it can prove to be difficult. Investments require records of income and distribution. An attorney can help you understand your responsibilities to investors.
- Insurance: All businesses require insurance, but what type of insurance and to what amount can vary. Legal representation can help you to understand what coverage you need and what additional coverage may be beneficial in the event of workplace injuries, data breaches, or customer complaints.
- Contracts: New businesses often require relationships with external parties, such as vendors, suppliers, clients, or any other 3rd party that may be involved. Contracts need to explicitly explain things like how decisions are made, how to handle ownership changes, and what to do if there is a disagreement between the parties. If you don’t have comprehensive contracts that have been reviewed by an attorney, you can easily end up facing a costly legal battle.
- Compliance: Federal and state regulations often have many strict requirements on the types of records that businesses keep and for how long they keep them. Many industries also require reporting of certain information on a regular basis. A business attorney can walk you through the requirements so that you know exactly what information you need to keep, how long to keep it, and where it must be reported.
- Risk mitigation/management: Every business faces risk, although the type of risk may vary depending upon your industry or location. Risk management activities often include creating a policy and procedure handbook, ensuring compliance with wage laws, adhering to digital information requirements, and developing training material. An attorney can assist with the development of all of these materials in order to mitigate your risk. If a risk emerges, an attorney can also assist with any legal guidance or representation to minimize the impact of lawsuits or fines.
- Liability: Different ownership structures and business activities can put your personal assets at risk or protect them, depending upon what you are doing. An attorney can help you to identify strategies that will protect your personal assets in the event that you have outstanding debts that cannot be paid or you are sued.
- Bylaws: Some business types require bylaws that outline the rules that owners and managers need to follow while they are running the business. Internal governance documents are incredibly important not only to ensure that corporate rules are followed but also serve as documentation of compliance in the event of an audit or visit by a regulatory agency.
This list is just the tip of the iceberg in terms of what a good startup business attorney can do for your company. Depending upon your unique circumstances, a great attorney can help discuss your needs and strategically plan with you in a way that maximizes profits and minimizes liabilities – creating ideal conditions for your business to thrive, now and in the future!