One of the questions that I am most frequently asked is, "Do I really need an attorney to set up my own small business or business venture?" The quickest answer I can give is YES. As I will discuss, having an attorney during the formation of your business (at the least) will ensure that you are getting off on the right foot. In this post I will describe the services that we have available and why they could be important to the future success of your dream venture.
Formation
The first key point in developing a business is obviously the formation stage. There are several avenues that a business owner can pursue when starting a business. First, the owner must determine what type of business they are starting. This could be an unregistered sole proprietorship (rarely used anymore), a partnership (or variation, or any of the forms of formal incorporation. Much of this depends on the liability or risk the owner is willing to place on themselves. Also it can depend on the types of tax advantages the owner is looking to achieve or the type of business the owner is looking to open. Generally, you look to what the norm is in that chapter of the business world.
An attorney can help you draft and file the documents necessary to complete proper business formation. For those DIYers out there it is still beneficial to have firm look over any documentation you have prepared to find any mistakes which may stall the process. Our firm does initial review at a much lower rate than we would if we were also preparing the drafts. Some of the items you may have prepared would include:
- State Department Filing
- Company Name Registration
- Partnership/Operating Agreement
- Bylaws
- Filing for Tax ID Number
- Filing for Tax Exempt Status
And the list could go on.
Operation
This is an area that does not get hit on very much when discussing the legal avenues of small businesses; however, it can be one of the most important parts of owning a small business. Whether you are a florist or a photographer the one thing that is incredibly important is that you have an attorney reviewed and enforceable service contract. You see it repeatedly on those afternoon "courtroom" programs that people hire someone to provide a service, but never put it in writing. What ends up happening? Either the service is never provided or the provider never gets paid. It is hard enough in these economic times to start a business. You shouldn't have to worry about getting paid. Much of this anxiety can be laid to rest with an appropriate contract. Again this is something that you can draft yourself, but it is wise to have an attorney (at least) review it because some of your clauses may be unenforceable under the law.
An additional area to watch for and seek the assistance of an attorney is employment contracts or related issues. The area of employment law is growing and has become more contentious as economic pressures increase. Therefore, it is a good idea to have a solid employment contract with your employees or an acknowledgement form that states they are at-will. Classifying an employee clearly is important should that employee get injured (Workers Compensation) or be discharged (Unemployment Benefits).
Liability Protection
The final area of importance for a small business is liability protection. Much of this area can be covered by the efficient and smart filing of certain types of business entities (LLC, LLP, etc.). Additionally, most if not all business carry some form of business insurance to protect themselves from liability to others in case of an accident or claim. However, it is always nice to have an attorney that knows your business (from formation to filed claim) to help expedite any issues that may arise. Generally, an insurance provider with assign an attorney to the business; however, that attorney is looking out for the interests of the insurance company and may not do what is best for you or your business. Having an attorney on retainer or that is familiar with you will allow you to have your opinions and feelings represented to the insurer and the claimant. As part of our continuing support for our small business clients we physically visit the businesses to discuss any issues that they may have. Also while at the business we would do a walk-through in order to point out any areas which may expose the business to liability. We want our businesses to be a safe environment for the owners, employees, and their customers.
We have special rates for our small business clients. As stated above there are couple things we do differently from other firms to provide the highest level of service to our business clients. In particular we like to frequent our clients' businesses as patrons and advisers to help their continuing success. If you have any questions or would like to know more please contact our office at 610.945.1790.
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