So you’ve saved up some money, developed a marketable concept, and you’re starting to create a business plan. Congratulations on your first steps towards entrepreneurship! It may have been your childhood dream, or a recent revelation, but now you’re finally geared up to get things started. But wait!
Have you contacted a lawyer yet?
It’s common to think we only need a lawyer for when something “hits the fan.” This is a common misconception! You don’t need a catastrophe to occur to have an attorney at your business’s side. Actually, most businesses benefit from having an attorney on their team in the beginning stages and before finding themselves in an urgent state! Below is a list of reasons why every business needs a lawyer.
1. Developing a Legal Structure
Your business structure will determine what liabilities you face, how your entity is taxed, and how your profits are divided. Here is a brief overview of the different forms of business structures.
- Sole Proprietorship – One of the simplest structures for a business. You have complete control and face 100% liability. Taxwise, you and your business are one in the same. Many people are sole proprietors without knowing it (a freelance graphic designer, for example).
- Partnership – A business that is owned by two or more people. Partners share profits as well as losses. Partnerships are required to register their business with the state.
- Corporation – A private entity owned by shareholders. The corporate structure also helps create a barrier for your own personal assets in case you get sued.
- S- Corporation – This structure is very similar to a corporation, but it gets taxed differently. Corporations face double taxation since their shareholders and the company itself are two separate legal entities. An S-Corporation’s income is only taxed once.
- Limited Liability Company (LLC) – 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 report profits and losses on their personal tax returns.
Based on your needs, a lawyer can help steer you in the right direction in selecting the legal structure for your business. Some things may be obvious, like a neighborhood shop doesn’t need to be a corporation. However, some things may not be so clear like how you will be taxed, or what you can be held personally liable for.
2. Trademark and Intellectual Property
You could have a great product or service but might faceplant when it comes to selecting the name. Did you know that Starbucks was nearly called “Pequod’s”? Or that Pepsi was first released as “Brad’s Drink”? Additionally, a bad name may just be the least of your issues when you receive a cease and desist notice for unknowingly using someone’s trademark.
Consulting with a lawyer first, can help you avoid this issue altogether.
It’s their job to research trademarks so that you avoid infringement and to scout any potential issues. Once your brand is established, they will also help protect your business’s name. Establishing a trademark can be research intensive and time-consuming. Having a lawyer take care of these matters can let you fully dedicate yourself to getting your new business started to starting your new business and avoiding any potential conflicts before establishing the business’s brand and image.
3. Contracts, Contracts, and more Contracts
Contracts play a major part in businesses, no matter what size. You will need them to handle sales, employees, and leases. Here are some examples:
- Bill of Sale – Formally states a property’s transfer of ownership (a good that you are selling).
- Warranty – As you probably already know, a warranty reimburses a customer if the receive a product that is defective or breaks down during its expected lifetime. This too is a contract.
- 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 – One of the most important contracts you will have to sign. It’s the terms and conditions that you have with a landlord when renting out a space for your business. This goes for offices, stores, restaurants, and etc.
A good lawyer at your side can help you develop contracts to steer you away from potential legal troubles. They can also lobby for your best interests in the contracts you make or enter into with external parties.
The commercial property lease agreement is a contract that you will definitely want to look over with an attorney. Generally, these contracts are drafted by another lawyer and are made to favor the landlord. Although this can sound intimidating, you can effectively negotiate the terms of the lease with a lawyer at your side.
4. Exit Strategy and Avoiding Disputes
People go to have attorneys draft a will so that when the day comes, any disputes involving the succession of their assets can be avoided. A lawyer can help develop an exit strategy for your business as you grow, ensuring it will continue (or dissolve) in whatever manner you choose.
But what if that doesn’t happen?
In the case of death or severe illness, who takes over? What if the bank and landlord want to claim the same assets as collateral if you go out of business? These types of agreements usually come in dense and confusing language. A lawyer will put these types of agreements in plain English and help you plan accordingly.
In a perfect world, business partners stick together, no one ever comes up with eerily similar ideas, and contracts are always upheld.
But alas, this is not always the case.
If there is anything lawyers are known for, it’s settling disputes. However, when these problems do
arise wouldn’t you rather have a lawyer that personally knows you and the many facets of your business? This is the difference with Uncommon Legal.
At Uncommon Legal, we operate on a Value-Based Fee structure and offer Creative Counsel Plans to help you from day one. We draft, review, and revise contracts, file copyrights and trademarks, and will even form your entity for you!
To best serve our clients we offer ongoing access to our legal team, including quarterly strategy calls and open email communication. If one of our current plans isn’t the right fit, we will work with you to tailor a plan specific to your needs.
When things go wrong, you’ll already have a legal team who knows you and your business and are willing to lobby for your best interests. Check out our Creative Counsel Plans to see which one is right for you, and contact us for help with your business needs, today.