When Should a Small Business Hire a Business Attorney?

When beginning a business, you may not need to employ a lawyer as quickly as you believe.

Do you need to employ a lawyer to assist you get started with your start-up business after you have a fantastic idea? Certainly not. Many of the early stages in deciding on and creating your company organization may be completed on your own. However, as your firm progresses—for example, when you begin employing workers or entering into more sophisticated agreements—you may require legal advice. Remember, if you're unsure about something at any point during the process, hiring a lawyer can help you save money by preventing you from making a mistake or getting yourself into a position with unforeseen (and potentially costly) repercussions

Deciding on Your Business Structure

You'll need to figure out what kind of ownership structure is best for your new company. Most states' secretary of state (SOS) websites provide information on the many forms of business entities available, including sole proprietorship, limited liability company, corporation, and partnership. There are also several online and offline tools available to assist you in making sense of your options. The sort of business you have, the number of owners, and your funding will all influence which ownership structure is ideal for you. Although many entrepreneurs make this option on their own, you may have concerns about liability, taxation, ownership, or other issues that you should explore with a lawyer or accountant before making a decision. See Choosing the Best Ownership Structure for Your Business for additional information.

Checking for Name Availability

Another first step is to come up with a name for your company. While there are some legal requirements for naming your company, you can typically do so without the assistance of a lawyer. The first step is to determine whether the name you choose is accessible in the state where you intend to create and manage your company. On their SOS website, most states provide a company name database containing the names of all the firms that have previously registered in their state. There should be instructions there on how to check for name availability and, if you decide to do so, how to reserve your company name.

Once you've established that the name you wish to use is available in your state, check to see if it's not already a registered trademark. You can do so by going to the Trademark Electronic Business Center of the United States Patent and Trademark Office. Do you intend to create a company website? If that's the case, you should also look into domain name disputes. 

Forming Your Business Entity

You're ready to create your company organization once you've settled on a business structure and a name for your new venture. You won't have to file any paperwork or pay any costs if you choose to operate as a sole proprietorship or partnership (although partners should enter into a partnership agreement).

You'll need to file organizational paperwork with the state and pay a filing fee if you wish to create an LLC or company. The majority of SOS offices provide useful information and forms for forming an LLC or company. The name and address of the new business, the name and address of your registered agent, and a few other details are usually all that is required on these papers. On the SOS website, there are generally clear instructions on how to fill out the form, pay the filing fee, and file the paperwork with the state. 

You'll need to create bylaws if you're forming a corporation, or an operating agreement if you're forming an LLC, in addition to registering your business entity with the SOS's office. These are internal documents that outline your organization's rules and procedures, such as how to hold meetings, take action, or dissolve and close your business. 
You should create a company bank account and keep all money for your new business separate from your personal or other business funds as part of getting your firm off the ground. To do so, you'll need an employment identification number (EIN) from the Internal Revenue Service, which you may get online. You can open a business account at a local bank once you receive your EIN and a stamped copy of your formation paperwork from the SOS. If you're a sole proprietorship or a single-member LLC with no plans to hire staff, you don't need an EIN, but it's a smart business practice to have one.

Operating the Business

Once you've completed the necessary paperwork, you can concentrate your efforts on getting your company up and running, determining the best approach to offer your services or products, and establishing the web presence you desire. You may need to develop contracts or other forms of agreements for the services or goods your company provides, depending on what you do. You'll also need to obtain the necessary permissions and licenses, as well as enough company insurance. There are several self-help tools available that can assist you in completing these chores without the need to engage a lawyer.

You may encounter more difficult problems or legal concerns with potentially significant repercussions at some point. This might happen as a result of a potential employee lawsuit, bringing in investors, or purchasing another company. The expense of engaging an experienced lawyer to assist you in more difficult cases will be more than covered by the fees you may pay if you make a mistake. Most small firms will require the assistance of an experienced small company lawyer at some time in the future

​​​​​​​​​​​Yoel Molina, Esq. (AKA “Mo”)

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