Should I Hire an Attorney to Help Me with My Startup Business?
By: Ian F, a client of Haimo Law
May 1, 2014
Over the past few years I have started two separate businesses, both of which I financed on my own with limited funds. And as anyone who has tried to start a business on their own knows, there’s a tendency to do as many tasks as possible by yourself, thereby saving precious dollars. In a lot of cases, this can be both necessary and beneficial, allowing you to conserve funds and learn about different aspects of your own business. But there are certain areas of a startup business that are better left to specialized professionals, who will almost certainly save you significant money and trouble in the long run. These professionals can become extremely valuable members of your team both with regards to pre-startup preparation and questions that arise after you’ve launched. And of all of these professionals, none may be more important than your company’s attorney.
When I started my first business, I decided to go at it alone. No attorney. No accountant. Just me and Google, figuring it out together. I’d like to think I did a decent job, but some mistakes were made. And more importantly than that, the amount of time I spent doing the research to learn just a small portion of what a good attorney would already know probably cost me way more than hiring a lawyer ever would. When I started my second company, I applied the valuable lesson I learned from the first business and hired an attorney.
How can an attorney help you before you launch your business?
One of the most important decisions you must make before you launch your business is what type of entity you should form. Partnership? C Corp? S Corp? LLC? It all comes down to things like liability, management structure, and tax benefits. If you choose a popular entity like the LLC, you may even face the secondary question of whether you want to be taxed as an S Corp, a C Corp, or a partnership. And even more confusing, whether you should open a single-owner LLC? Believe it or not, there may be major benefits that come with taking on a partner, even if you only give away a 1% ownership in your business. Now, there are plenty of articles on the internet that discuss the positives and negatives of all of these types of entities. But no article is anywhere near an equal substitute for meeting with a knowledgeable attorney who will discuss your specific business with you and help you make the correct entity determination. I’ve done it both ways (with and without an attorney), and trust me, the attorney was worth every penny many times over.
There are also some other things an attorney can really help you with before you launch your business. See, no matter which entity you choose, you will need documents that govern the business and lay out any and all agreements between partners. And do you have any intellectual property to protect, such as patents or trademarks? If so, the sooner you have an attorney working on your behalf, the more likely you will receive that protection. These are just a few of the things a good business attorney can help you with before you launch your new startup.
Do you still need an attorney once your business is up and running?
It should now be clear that having an experienced lawyer help you plan your business and form your entity is a smart decision that will help start you on a path to success. But once you launch, has that relationship run its course? Will you need the protection and advice of a good lawyer? In just about every business, the answer is yes. For starters, you will almost certainly need contracts drawn up. From contracts with employees to vendors to anyone else you do business with, having an attorney write and review them is not just advisable… it’s imperative. And maybe even more important is the business advice that a good attorney can give. That’s why it’s vital that you make your lawyer a true member of your team as opposed to just some person who does tasks for you. In my case, having a trusted attorney to discuss business plans with, bounce ideas off, and get unbiased opinions from has been invaluable. And because of that, I would never start another business without one.
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