As a small business owner, you have a lot on your plate—from managing day-to-day operations to ensuring financial stability. Legal issues, while perhaps not always top of mind, can have a significant impact on the success and longevity of your business. Whether you’re just starting out or have been in business for years, knowing when to hire a lawyer is crucial to ensure that you’re complying with the law, protecting your interests, and mitigating potential risks.
In this post, we’ll discuss the key moments when hiring a lawyer for your small business is a wise decision.
1. When Starting Your Business
One of the most important times to consult with a lawyer is when you’re first starting your business. While the excitement of launching a new venture can be overwhelming, laying a solid legal foundation is essential for future success. Here are a few areas where legal advice is critical:
Choosing the Right Business Structure: Whether you’re starting a sole proprietorship, partnership, LLC, or corporation, the structure you choose has significant legal and tax implications. A lawyer can help you determine which structure best suits your goals, liability concerns, and tax situation.
Registering Your Business: Depending on your location and business type, you may need to register your business with state or local authorities. A lawyer can assist with completing the necessary paperwork and ensuring your business complies with legal requirements.
Drafting Operating Agreements and Bylaws: If you have co-founders or plan to bring on partners, having a lawyer draft an operating agreement (for an LLC) or bylaws (for a corporation) is essential. These documents outline how the business will be run and help prevent disputes down the road.
2. When Drafting or Reviewing Contracts
Contracts are an essential part of running any business, whether you’re hiring employees, entering into supplier agreements, or securing client work. A lawyer can help ensure that the contracts you sign—or are asked to sign—are legally sound and protect your business interests. Key situations where a lawyer can help include:
Employment Contracts: If you hire employees or independent contractors, having solid contracts in place can prevent misunderstandings and potential legal disputes.
Client and Vendor Agreements: Clear, well-drafted contracts with clients and vendors help establish expectations and protect your business from financial or legal issues down the road.
Non-Disclosure Agreements (NDAs): If your business deals with sensitive information, an NDA can protect your intellectual property and confidential business data.
Having a lawyer review contracts before signing them can ensure they are fair, clear, and legally binding. It also helps to prevent unintended clauses that could negatively impact your business in the future.
3. When Navigating Business Disputes
Even the best-run businesses can experience disputes, whether it’s with a customer, vendor, business partner, or employee. A lawyer can provide invaluable assistance in resolving conflicts without damaging your reputation or financial standing. Consider hiring a lawyer if:
You’re Facing a Lawsuit: If your business is being sued or you need to file a lawsuit, having a lawyer who specializes in business litigation is crucial. They can guide you through the process and ensure that you’re adequately prepared.
Disputes with Business Partners: Disagreements with co-founders or partners are common in small businesses. A lawyer can help resolve the situation through negotiation, mediation, or, if necessary, litigation.
Intellectual Property Issues: If someone is infringing on your intellectual property (e.g., trademarks, patents, copyrights), you’ll need a lawyer to protect your assets and take legal action if necessary.
In some cases, disputes can be resolved through mediation or arbitration, saving both time and money compared to going to court. An experienced lawyer can advise on the best approach based on the nature of the dispute.
4. When Complying with Regulations and Licenses
Businesses are subject to a wide range of regulations depending on the industry, location, and size. These regulations can include zoning laws, tax codes, environmental laws, and health and safety standards. If you’re unsure of your obligations or need help complying with complex regulations, it’s a good idea to consult a lawyer. Common legal concerns include:
Tax Compliance: Small businesses need to comply with both federal and state tax regulations. A lawyer can help ensure your business is properly set up for tax purposes, assist with payroll taxes, and help you avoid costly mistakes.
Industry-Specific Regulations: Certain industries, such as healthcare, finance, and foodservice, are subject to specific regulatory standards. A lawyer familiar with your industry can help navigate these regulations and avoid penalties.
Licensing Requirements: Many businesses require specific licenses or permits to operate legally. A lawyer can help you identify what licenses are necessary and ensure that you’re compliant with state and local regulations.
5. When Dealing with Employee Issues
Employees are one of your most valuable assets, but they can also present legal challenges if not properly managed. A lawyer can help with the many legal aspects of hiring, managing, and terminating employees. Here are a few scenarios where you should seek legal advice:
Employee Contracts and Policies: If you have employees, you’ll need to create clear, legally sound contracts and policies. A lawyer can help you develop employee handbooks, outline company policies, and draft fair and legally compliant contracts.
Employee Disputes: If you face issues such as wrongful termination, discrimination claims, or wage disputes, a lawyer can guide you through the legal process and help you navigate employment laws.
Employee Benefits and Compensation: If you plan to offer benefits, pensions, or stock options, a lawyer can help you structure these offerings to comply with employment laws and tax regulations.
6. When Expanding Your Business
As your small business grows, so do the complexities of managing it. Whether you’re expanding into new markets, adding more employees, or increasing production, there are legal considerations to keep in mind. A lawyer can help with:
Franchise or Licensing Agreements: If you’re expanding through franchising or licensing your brand, a lawyer can help draft agreements that protect your business and intellectual property.
Mergers and Acquisitions: If you’re considering merging with another business or acquiring another company, a lawyer can help navigate the complexities of business transactions, due diligence, and contract negotiations.
Real Estate Transactions: Expanding your business may require leasing or purchasing commercial property. A lawyer can help review leases or contracts and negotiate terms that are favorable to your business.
7. When Protecting Your Intellectual Property
Your business’s intellectual property (IP)—such as logos, trademarks, patents, and copyrights—can be some of its most valuable assets. To ensure that your intellectual property is protected and not violated, a lawyer can help with:
Trademark Registration: A lawyer can help you register your business name, logo, or slogan with the U.S. Patent and Trademark Office (USPTO) to ensure your brand is protected.
Copyrights and Patents: If your business creates original works or inventions, a lawyer can help you file for copyrights or patents to protect your creations from unauthorized use.
Enforcing IP Rights: If someone infringes on your IP, a lawyer can help enforce your rights through cease-and-desist letters, legal claims, or lawsuits.
8. When Planning for Exit or Succession
Every small business owner should have an exit plan in place, whether that involves selling the business, transferring ownership, or shutting down operations. A lawyer can help you create a succession plan that ensures a smooth transition and minimizes legal issues when it’s time to step away.
Business Valuation and Sale: If you’re selling your business, a lawyer can help you determine its value, structure the sale, and negotiate the terms to protect your interests.
Estate Planning for Business Owners: A lawyer can also help you with estate planning to ensure that your business is passed on to heirs or partners according to your wishes.