The expertise that attorneys bring to a business comes at a cost that not all entrepreneurs can afford when establishing their businesses. This leaves would-be business owners asking, "Do I need a lawyer to start a small business?"
Keep reading to learn about the benefits of consulting a small business lawyer and whether or not you need an attorney to get your business off the ground.
Small businesses rely on lawyers to provide legal expertise in some areas, which they might not be well-versed. These include the knowledge to:
The specific scenarios when start-up small businesses often choose to consult a lawyer include:
Retaining the services of a lawyer is not required as a condition of starting a business. In fact, many of the steps of starting a business cited above can be performed without a lawyer. This means the decision to hire a lawyer or go the DIY route depends on your business entity. Also, consider the amount of time and effort you are willing to expend to get your business off the ground.
Sole proprietorships, being the simplest business entity, can easily be launched on your own without a lawyer. You don't have to file incorporation documents to start operating. Although, you may need to file an assumed name certificate locally, obtain all licenses and permits, and get an EIN from the IRS. Depending on the nature of your business, this usually involves straightforward paperwork you can find online.
Generally, partnerships are the first entity type for which some business owners choose to seek the help of an attorney. You will need to register an assumed business name at the state or local level.
More importantly, creating a partnership agreement for partners to enter into, while not mandatory in most states, is strongly urged. You can also file these forms yourself through online legal services.
LLCs can benefit from a lawyer as these entities often require filing articles of organization (or a certificate of formation) with the state, the appointment of a registered agent and adherence to other regulatory requirements. Therefore, consider creating an operating agreement. You can file such agreements through online legal services, but lawyers can construct agreements more tailored to your business.
S-corporation and corporation owners stand to benefit the most from hiring a lawyer as these complex entities usually require filing legal papers. Critical legal documents include filing articles of organization, establishing corporate bylaws, appointing corporate directors and issuing stock to shareholders. As with LLCs, there are online legal services that allow you to set up a corporation yourself. However, lawyers can better walk you through potential pitfalls before signing on the dotted line.