Starting a new business and building it from the ground up is no mean task, particularly if you are not yet familiar with the intricacies that come with business management. There are a lot of issues that need fixing right from the go. And as the business grows so also will the challenges and complications. But when you have a lawyer with a well-grounded knowledge of business law, the challenges can be easily managed as they arise.
It’s common to think that we only need a lawyer when “things go south”. This however is a misconception! You don’t need to wait for the worst to happen before you start shopping for an attorney. Most companies actually profit from getting an attorney on their team in the early stages and before finding themselves in a state of urgency!
Below are five cogent reasons why every business needs a lawyer.
Set Up a Legal Business Structure
You need to get this right from the onset. The business structure or framework you put in place will determine what liabilities you face, how the company is taxed, and how your profits are shared. You have to decide if your business should be any of the following;
- Sole Proprietorship – where you can have complete control and face 100% liability. Taxwise, Riskwise, and Profitwise, the business is all yours.
- Partnership – where a business is owned by two or more people. Both income and losses are shared by partners. Partnerships must register their company with the government.
- Corporation – which is a shareholder-owned private company. In this business framework, there is a barrier to your personal belongings if the company gets sued.
- S- Corperations – which is a somewhat similar structure to a corporation except for how it is taxed. In this business structure, the shareholders, and the company itself, are two separate legal entities. Hence, corperations are subject to double taxation.
- Limited Liability Company (LLC) – This is one of the most popular structures for small businesses. An LLC has the asset protection of a corporation and its profits are not taxed. Instead, members of the LLC are bound to report profits and losses on their personal tax returns.
Based on your needs and vision for the future, a lawyer can help you select the right legal framework for your business.
Read also : 4 HEADWINDS STALLING THE GROWTH OF YOUR BUSINESS
Trademark and intellectual property
You may have taken a great time to create a good product or service but flub at something as straightforward as choosing the right business name. You would be surprised to learn that popular brand “Starbucks” was nearly called “Pequod’s”? Or that Pepsi was first released as “Brad’s Drink”? Again, a bad name may just be the least of your problems when you receive a cease and desist notice for unknowingly using someone’s trademark.
First consulting with a lawyer will help you fully avoid this problem. It is the Lawyer’s job to properly research trademarks to steer your business clear any infringement or other possible legal issues that may arise. They’ll also help protect the reputation of your company once your brand is created. Creating a trademark can be complex and time-consuming work. Before establishing the brand and image of the business, having a lawyer take care of these matters can allow you to dedicate yourself fully to getting your new business started and avoid any potential conflicts.
Evaluate and Negotiate Terms of Contracts
Contracts, no matter what size, play a major part in every organization. Contracts are needed at different levels of sales, hiring, and leases. Here are a few examples:
- Bill of Sale – Formally specifies the transfer of possession of a property (a product that you sell).
- Warranty – As you probably already know, a warranty will reimburse a customer if they receive a defective product or it breaks down during its life expectancy. It is a contract too.
- Employment Agreement – An outline of job responsibilities and methods of payment. These are usually verbal but can be made into a formal document or in the form of an employee guidebook.
- Employee Non-compete Agreement – A contract that bars a former employee from working with competitors after termination or resignation. This is meant to protect your trade secrets.
- Commercial Property Lease Agreement – This is one of the most important contracts that you will be signing. It’s the terms and conditions you have with a landlord when renting out a property for your company.
A competent lawyer by your side will help you develop contracts to prevent future legal issues. They can also lobby for your best interests in the contracts you make or enter into with external parties.
Prepare Exit Strategy and Avoid Disputes
People get lawyers to write their will so that any conflicts that require a transfer of their properties can be resolved when the day comes. An attorney will help create an exit plan for your company as you expand, ensuring that it continues (or dissolves) in whatever direction you choose.
But in case this doesn’t happen
Who takes over in case of death or serious illness?
What if the bank and the landlord try to lay claims to the same assets as collateral if you go out of business? Typically such forms of agreement come in complex and ambiguous terms. A lawyer can bring in plain English these forms of arrangements and help you prepare accordingly.
Settle Conflicts When They Arise
In a perfect world, business partners would stick together and see the terms of the business through. Contracts are always upheld and no one ever breaks away to launch a startup with brilliantly similar ideas.
Yet sadly that is not always the case.
If there is something for which attorneys are known, it’s in settling disputes. Besides, If these issues do eventually arise, wouldn’t you rather have an attorney who knows you personally and the many facets of your business?
Remember, whatever the situation, as long as a business exists, there will always be a need for legal protection. So make the smart move and hire a professional company lawyer to ensure the business is ready for unexpected legal situations.