One of the most challenging questions small business owners must ask themselves on a daily, weekly, or monthly basis is whether what they are doing needs the consultancy or assistance of a business lawyer. Most small business owners assume that lawyers charge high rates that are too expensive with any extra capital the business is bringing in. Thus, most small companies decide to hire a business lawyer only after an issue has happened.
These issues could include a customer lawsuit, a supplier violating a contract, or another exceedingly problematic occurrence. However, what most small businesses cannot perceive is that seeking legal assistance early and often will usually prevent the most common legal problems businesses face—lessening the overall cost of operations.
While there is no need to consult a lawyer with every matter you face, using a lawyer when it is imperative can end up saving you thousands or even millions of dollars throughout the life of your business. Below is a description of examples that may not need a lawyer, times when you should consult a business lawyer, and why you should try to prevent legal problems before they can ever happen.
Issues you can handle without a business lawyer
Specific issues you will face while you make, run, sell, or close your company does not need legal assistance as they are either uncomplicated or easy enough that you can figure them out after a small research period. The following list encompasses the most common tasks business owners should consider working through themselves:
- Writing a business plan
- Researching and choosing a name for your business (previously trademarked business names can be found online)
- Putting aside a domain name for your website
- Requesting for an employer identification number (EIN), which you will need for employee tax issues
- Interviewing and hiring employees (there are federal and state anti-bias laws that monitor the hiring of employees)
- Submitting essential internal revenue service forms
- Hiring independent contractors and contracting with sellers
- Handling audits initiated by the internal revenue services
The list above does not include every business issue that does not need a lawyer and in some cases—depending on the circumstances—the issues above may need legal assistance. Further, if you are a well-funded business or have access to inexpensive or free legal help, consulting a skilled business lawyer is always a good idea.
Issues where a business lawyer can help
Most intelligent business owners can manage any of the issues above. Still, when a business encounters time-consuming and complicated issues that could result in potential liability, the best decision to make is to consult and talk to an experienced business lawyer. Below are a few cases where a small business should think about hiring a lawyer.
- Former, current, or prospective employees suing on the bases of bias in hiring, firing, or unfriendly work environment
- Making contracts for use with consumers, clients, suppliers, or other business partners
- Local, state, or federal government entities file complaints or investigate your business for infractions of any laws
- Making a legal partnership agreement, limited liability company (LLC) operating agreement or shareholder’s consensus
- Making a buy-sell consensus with partners
- An environmental problem arises and your business is involved (even if your business didn’t cause the environmental problem, you may be punished)
- Updating any partnership, or shareholder’s consensuses under which you are presently operating
- Negotiating for the sale of your company or for the obtaining of another company or its assets
Prevent issues before they occur
You should certainly consult a lawyer to help you solve the issues stated above. However, your real focus should be set on preventing legal problems from ever even happening. While you may not need an attorney’s help to solve every problem, a knowledgeable and experienced business lawyer will play a key role in guaranteeing your business overall. Preventing legal problems before they occur will be necessary to your business’s success as once you are sued, the only question you will have left to answer is how much will the damages, court fees, and lawyer’s fees cost you.
One of the easiest ways to make your business legally safe is to—at the inception of your business—make a consultation agreement with a lawyer you trust. This agreement will let you do a considerable portion of the research while still receiving the legal guidance that will be key to your success.
Two common situations can easily be prevented if a business uses an attorney.
The first scenario involves a business owner making their own contract to use with a business partner or supplier who then misuses this agreement. While you may think that you can easily make your own contracts, by not having a business lawyer draft, or at least scrutinizing your contract, you are opening yourself up to serious legal and financial problems.
Mergers and acquisitions
The second common issue that clients can be helped with is when they look to sell their business or buy another company. Most people think that when they buy a company, it is implied that they will receive all of that business’s assets. However, depending on how a company is organized, you may only be receiving the supply side of the business when you were also anticipating obtaining the storefront or other real estate assets.
In both of these situations, the businesses described could have saved themselves considerable time, money, and stress by consulting a business lawyer before proceeding with the transactions. Trying to save money and then later paying a significant amount more to compensate for the result of this weak planning is all too common among the smallest businesses.