Why You Need to Hire a Lawyer When Starting a Business
Although you may think that you can’t afford to hire a lawyer, obtaining legal counsel helps set your new business up for success from day one. There are a variety of elements when it comes to structuring your business that your lawyer will put in place that can greatly benefit you down the road. Plus, it’s less expensive to get a lawyer up front than it is to hire one later to fix problems that may have arisen from not having the correct legal requirements in place.
Although there are an unlimited number of ways that a lawyer can assist during the initial setup of your business, some of the major areas are as follows.
Structuring Your Business
In order to limit your liability and receive a lower tax rate, you will probably want to incorporate the business. During incorporation, you will determine the number of shares you want to issue, select directors and officers for the company, and layout any other provisions.
Drafting a Shareholders’ Agreement
A shareholders’ agreement outlines how a company is structured and governed. It includes details such as the number of shareholders, how the shares are divided among them, how the shares are held, and what restrictions there are on issuing additional shares. It also includes details regarding the obligations of the shareholders, how disputes among shareholders will be handled, and what happens if a shareholder want to sell his/her shares.
Setting Up Your Office
Before deciding on a location for your new office, make sure to thoroughly assess your current needs, but also consider where you could be in 12, 18, or 24 months. If you choose to rent commercial space, have your lawyer review the terms of the lease before you sign it. Some considerations that should be outlined in the lease include: 1) the length of the lease; 2) what services are included as part of the lease (i.e. snow removal, janitorial service, etc.); 3) who is responsible for repairs; and 4) what the terms are for ending the lease.
Contracts and Other Agreements
There are a variety of legal documents such as employment agreements, non-disclosure agreements, and licensing agreements that new businesses should have in place from the get-go. Also, if you plan to obtain financing for your startup, you will want to have your lawyer review the terms imposed by the potential investor before you move forward.
You will encounter many other situations in the early days of your business that may require legal advice, so choosing a lawyer who specializes in business law or specifically in startups, could be very beneficial. Make sure you do your research before selecting a lawyer. Get recommendations from your business associates, ask for references, and see what you can find online. Once you have a list of potential lawyers, ask if they offer a free, one-time consultation, which will allow you to determine who the best fit is for you and your business, before moving forward.
Having worked with thousands of new businesses over the past 16 years, we’re here to make the process of starting a new business as stress-free as possible. If you need startup legal services, contact us today to learn more about how we can help.