As a business owner, it is important to understand why consulting a lawyer might be essential for your small business.
It is less expensive to retain a lawyer and have your legal work done properly than to hire a lawyer to fix problems after they happen. Lawyers are trained to interpret the law and can be valuable when starting a business. Sometimes procedures and forms for business look easy, but legal transactions can be more complex than they seem.
When do you need a lawyer?
There are a number of situations where you may want to consult a lawyer, such as:
Choosing a business structure
You often start a new business by choosing a legal structure that will suit your business needs. Your options range from sole proprietorships and partnerships to incorporated companies and co-operatives. A lawyer can help you choose the right business structure using factors, including: the number of people involved, the business type, tax issues, liability concerns and financial requirements.
Buying an existing business
If you buy an existing business, you should have a ‘buy and sell’ agreement signed by both parties that details the demands, obligations of each, and any other terms and conditions of the sale. It could also include a detailed method on how to resolve any disputes concerning the sale.
Leasing requirements
Most small businesses lease the space where their business is located. However, leases can be one of your largest expenses. Make sure that your lease has the flexibility you need to expand or change your business. A lawyer can also give you specific advice before you sign a lease.
Contracts
When you are dealing with legal contracts it is a good idea to get the advice of a lawyer before you sign. Some examples of contracts that a lawyer can help you with include:
- Licensing agreements
- Franchise agreements
- Employment contracts
- Subcontractor agreements
- Partnership, incorporation or shareholder agreements
- Lease agreements
- Mortgage, purchase agreements
Equity financing
If you plan on seeking equity financing for your business, a lawyer can help you write the terms of the shareholder agreement and review any legal documents provided by potential investors. Your lawyer can also help you assess how a shareholder agreement will impact other obligations and existing contracts with employees, suppliers or financial institutions.
Other issues requiring legal advice
There may be other issues where you can seek the advice of a lawyer in order to determine the best course of action, including:
- Environmental complaints or concerns
- Employee problems or conflicts
- Disagreements between business partners
- Closing your business
- Protecting your intellectual property
If the legality of your business practices is questioned, or if you are unsure about the legality of a business activity, you should get the advice of a lawyer.
Choosing a lawyer
If you have hired a lawyer before - for example when you were buying a house or resolving a personal issue - they may be able to refer you to a business lawyer. You can also talk to people you know and see if they have recommendations for business lawyers they dealt with successfully in the past. Many lawyers will meet you free of charge for the first time to establish expectations on both sides.
A general business lawyer can usually handle your daily affairs. If you need help with more complex business topics, like equity financing or intellectual property, you can also hire a lawyer who specializes in these subjects.
Make sure you understand your lawyer's billing practices. If you think it may be a while before your business starts generating revenue, make payment arrangements with your lawyer ahead of time.