Starting a business is a complex legal process, one that offers the opportunity of profitability if you can ensure you meet all obligations established under the law. Do you need a lawyer to start a business?
If you have extensive legal and industry knowledge, a proven game plan with no risk, and a viable plan for raising capital, you may not need a lawyer to start a business. However, in most situations, hiring an experienced legal team can minimize risk and create a foundation for true growth and success.
When Is a Business Lawyer a Wise Decision?
Before you start your company, you need to know what your legal opportunities and limitations are. A business lawyer is a guide who can comprehensively support your business success and minimize risks for failure. Consider some of the instances in which a Philadelphia business attorney is an important investment.
Your Business Formation Is Complex
A business lawyer is beneficial if you are doing more than becoming a solo operator. Forming a Limited Liability Corporation (LLC) or corporation is a complex process with several legal factors governing the process. Business formation is state-specific, with guidelines related to who can start a business, reporting requirements, and compliance restrictions.
Your attorney ensures you meet all legal requirements adequately. Legal guidance in choosing the right formation can also save you time and money down the road.
Contract Creation, Negotiation, and Disputes
Most businesses must navigate numerous contracts. Each one has specific implications on the way you operate your business, as well as the consequences of doing so. A business lawyer helps with contracts such as:
- License agreements
- Vendor agreements
- Contractor agreements
- Employment laws and regulations
- Shareholder terms and conditions
- Sales contracts for your products or services
- Lease contracts and agreements
- Employment contract disputes
- Intellectual property contracts
- Confidentiality agreements and nondisclosures
Each contract has specific requirements you must meet. For example, the contract you use to hire employees must meet all Equal Opportunity Employment laws at the federal level and any state-specific laws applicable. Vendor agreements must outline payment terms and conditions, while also providing clarity on any requirements for using or selling products.
Compliance and Regulations Apply to Your Business
Another critical time to hire a Philadelphia startup lawyer is to ensure you meet all compliance requirements. Each industry has its own set of rules to follow. As a business owner, it is your responsibility to understand these regulations to ensure compliance. That is not simplistic at any level.
Compliance and regulatory requirements fall into local, state, and federal requirements, along with some industry-specific rules. Your business lawyer will help you know what regulations impact your business and how to ensure you meet all requirements. For example, you may have specific obligations in areas such as:
- Zoning laws
- Employment-specific requirements
- Licensing for your business and services
- Permitting
- Marketing and competition laws
- Consumer protection laws
- Health and safety-related laws
- Environmental laws
In each of these areas, your business attorney provides guidance that can clarify concerns and help you navigate claims made against your business. For many companies, this becomes essential to minimizing ongoing risks associated with operating their company. Fines are expensive, and mistakes can lead to shuttering your company before you have a real opportunity to build it.
Investors Expect Clarity
Fundraising as a small business owner is a complex process. In every situation, you must demonstrate to the investor that your business is a worthy risk to them. Investors will ask questions and demand insight into your business goals and operations. Even if you are utilizing private investors, your local bank, or the Small Business Administration, you must be able to demonstrate that you are taking all steps expected of you.
As you start a business, you may develop various fundraising questions and uncertainties. Before you enter into an agreement, you need to be sure that the contract aligns with your business objectives and puts your company on the right path. If you overlook specific factors within the contract or do not understand your obligations, that could put your business at risk.
More so, you must meet all compliance rules related to fundraising in your industry. This may include meeting objectives related to securities laws. Often, a business may struggle with just knowing what its requirements are.
You Have Intellectual Property
Whether you already have trade secrets or you are developing them, you need a business lawyer to work closely with you to protect them. All types of intellectual property can be a critical asset that helps your business stand out. However, without proper protection, you immediately limit the viability of your business to safeguard those assets.
Your business attorney will help you to:
- Determine if you can obtain legal protections for your trademarks and trade secrets
- Ensure you are not overstepping the rights of another company or organization with intellectual property rights
- Aid in protecting creative works as you build them, to the fullest level possible under the law
- Filing trademarks and navigating your legal obligations in these areas
- Support you in disputes that arise over time
Each of these areas may impact your business right from the start or over time. By onboarding an attorney now, you minimize the risk of complications occurring later.
You Need Guidance on Your Business Plan
A startup attorney provides an avenue for creating a business plan that aligns with your expectations and the interests of the parties. Your lawyer will help you write a business plan in some situations. However, even if you write your own business plan, a lawyer will provide you with oversight on omissions and concerns that may arise. This can help you perfect your business plan long before you ask a lender to review it for potential fundraising opportunities.
You Want to Use Your Initial Capital Wisely
Another reason to hire a lawyer to start your business comes from the simple premise of safeguarding your assets. Every dollar matters when building a business, and yet many companies make mistakes that lead to costly outcomes that could have otherwise been avoided.
There are several types of mistakes a lawyer can help you avoid that could end up saving you money and time as you build your company.
- Oversights with compliance and regulatory requirements that lead to costly fines
- Marketing mistakes that contribute to claims made against your company
- Lack of insight into the true costs associated with loans or business funding that you take on
- Contract stipulations you did not know were present that led to fines or mistakes
- Poor due diligence in making critical business decisions that cost you dearly later
- Liability risks that put your personal assets on the line
Preserving your capital starts with understanding business opportunities and risks. With the guidance of a lawyer, you avoid many of the mistakes that limit cash flow or cause investors to pull back.
Hiring a Business Attorney for Your Startup Is Critically Important
If you are just creating an EIN for your company or writing your own business plan, it may not be necessary to hire an attorney to start a business. However, if you aim to create a strong business with the potential to grow and thrive, hiring a lawyer now makes sense. Contact an experienced business lawyer today to protect your business interests.
