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Do You Need a Startup Lawyer For Your Business?

Updated: October 24, 2022

Est. Reading: 6 minutes

Many startup founders begin with a business plan and investment money but lack an understanding of the legal side of things. There will likely be many times throughout the launch and growth of your business where having legal guidance can help you avoid trouble or setbacks. The truth is that most business owners need a qualified business attorney to provide legal advice, help prepare necessary legal documents, and provide representation in the event of litigation. In this article, we will explore the benefits an experienced startup lawyer can provide.

Reasons a Startup Should Hire a Lawyer

Different startup ideas will require different approaches based on the intent of the business owners, the structure of ownership, and numerous other factors. The laws surrounding these situations can vary drastically, and it is important that your business is structured, formed, and licensed properly. Failing to do so can expose you to unnecessary liability and risk.

Some of the most common ways a lawyer will be able to help your startup business include:

Choosing the Right Business Entity

There are several different types of business entities that you can choose from, each serving a different purpose. Several of these entities can be further subdivided based on the specifics of your business. A qualified attorney will help ensure that you select the right business entity for your startup right out of the gate.

Understand Your Personal Liability

This is a major part of choosing a business entity, but there may be other factors that impact your personal liability for business debts, litigation, and more. By working with a Glendale business lawyer to minimize your personal liability you offer a buffer between possible damages to the business and your personal property or equity. This will help offer security to you and your family as your business grows.

Handling Licenses and Permits

You will need to understand the permitting, licensing, and registration requirements of your business before you officially open your doors. Some business entities will be required to register with the state in which they operate while others will not.

amployees of a startup company at a table

Most businesses will need some form of business license or permit in order to operate legally. A qualified business attorney will be able to clear up any uncertainties you have about this process and ensure you are operating within the bounds of the law.

Interstate Business

Different states may set different requirements for operating a business than others. If your business model calls for operation in multiple states you will need to be sure your business is properly structured and licensed in each of them or you may risk losing the protections you have established.

A business attorney will have a greater understanding of the requirement states place on each type of business entity. Some will be more strict than others and will require more work. If you fail to conform to the laws and regulations set in place for your type of business you may lose the benefits and protections offered to you.

Full Control of Your Business

The majority of states have laws in place that fill in the blanks for businesses that fail to fully provide certain necessary information. This can be good, in that missing something while you establish your business will not invalidate all the rest of the work you have done. But it can also carry unintended consequences, such as classifying your business in an unintended way that could subject you to regulations that you were unaware of. A business lawyer can help you make sure everything necessary is submitted to keep your business running the way you intend.

Drafting Contracts

Contracts are everywhere in business. They govern agreements for real estate, services, supplies, employment, and more. Because of this, you will want to make sure your contracts are drawn up correctly to avoid any legal ramifications down the road.

Raising Money

Different business entities have different rules governing how they go about raising funds and distributing money. An attorney will be able to help you understand what regulations apply to you as you form your business and prevent you from making a major misstep.

Understand Your Taxes

In addition to liability protection, different business entities carry different advantages and disadvantages when it comes to taxation. Your business attorney will be able to explain the specifics of each and how they impact your choice of entity before you move forward.

When a Startup Should Hire an Attorney

You may not need to hire a lawyer as soon as you think when starting a business. Many of the early steps related to launching your new business are relatively simple and straightforward. As your business grows and you face hiring employees or increasingly complicated agreements, you will likely face a greater need for advice on legal matters related to running your company.

If at any point in the process you find yourself unsure of how to proceed, it is best to find an attorney to offer you guidance. Doing so before a problem rears its head is almost always cheaper and easier than going forward blindly and cleaning up messes later.

Startup founders will commonly work with a business attorney at the following times:

Name Availability Searches

Businesses need to file their name in the states in which they plan to form and operate. While this task is not particularly difficult and resources exist that will allow you to look for the availability of your chosen business name, many founders will work with an attorney to simplify the process. They will check with the state to ensure the name you have chosen is free and can move ahead with reserving the name and filing any paperwork associated with doing so.

Establishing Your Business Entity

This is one of the most important aspects of forming your business, as it has lasting impacts on your personal liability, taxes, business operations, and more. Different business entities will require different amounts of work to establish. An experienced business attorney will help you understand which type of business structure best suits your needs, make an informed decision, and move forward with creating your business.

Running Your Business

Once your business has been established and licensed you can set to the task of actually running it. Day to day operations can include contracts or other agreements, creating an employee handbook, securing new permits and licensing, and even dealing with business litigation. These can all be complicated and detailed legal situations that may be best handled by a trained and experienced professional. In many cases working with an attorney will actually save you time and money that can be directed toward growing your business.

What to Look For in a Lawyer When Starting a Business

Choosing the right lawyer for your business needs can be critical to ensuring everything is handled in a way that aligns with your expectations and is in line with the legal requirements where you choose to establish and operate your business.

text advising what to look for in a startup lawyer over an image of an attorneys desk

A competent startup lawyer can make the entire process simple and easy to understand, while the wrong lawyer can cost you valuable time and money through mistakes, miscommunication, and general misunderstandings. Some things to look for when deciding who to choose for legal representation include:

Someone With Experience in Your Type of Business

Different industries have different vernacular, licensing requirements, and any number of other possible sticking points. You should look for an attorney with experience in your field to make sure they understand the needs of your business. If your startup is involved in logistics you may not want to hire a lawyer who deals exclusively with commercial real estate, for example. Having a lawyer who knows how your business operates will certainly help when you are facing any type of legal issue.

Someone Who is Knowledgeable

Outside of industry-specific experience, you will want to be sure the lawyer you work with has experience in the tasks you need them to assist with. An attorney who has worked on similar cases or issues to yours will know the best way to approach the situation and reach a solution quickly and cost-effectively. If at any point you feel as if you are paying your lawyer to learn a new skill you may want to look for an alternative.

Someone Who Can Communicate Clearly

Your lawyer should be able to address your legal concerns clearly and in terms you understand. Business law can get complicated, particularly for the uninitiated, and you don't want to run into problems with your start-up business because there was a communication breakdown between you and your lawyer.

Someone Who Will Offer a Clear Breakdown of Their Fee Structure

Starting a new business is an expensive and time-consuming process, and the last thing you will want is a lawyer who surprises you with unexpected fees and costs. While there may be situations in which your attorney cannot tell you the exact number your case will come to, they should be able to guide you through their fee structure and include likely scenarios to help you understand how any fees and costs will be assessed.

Work With a Qualified Business Lawyer at Monahan Law Firm

Having an experienced lawyer on your side can make the process of founding your own business much easier. A lawyer who has experience with startups can help you determine the right type of entity, draft contracts and other agreements for your business, secure the necessary licenses and permits, and help you avoid common pitfalls that new business owners can encounter.

At Monahan Law Firm our legal team offers exceptional professional service to help navigate the process of founding your new company and protect your legal rights in the event of litigation. Contact us today to schedule an appointment with one of our dedicated business formation attorneys!

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Attorney Patrick Monahan

Patrick Monahan

Patrick Monahan is the managing partner of Monahan Law Firm, PLC. Patrick began his legal career practicing real estate, construction, and general business litigation.
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