Wednesday, June 24, 2015

Legal issues to consider when starting a business

We have been discussing questions a potential business owner should ask and answer before starting a business.  This week we will tackle legal issues.

Most small business owners are operating on a tight start-up budget and do not like to pay for accounting or legal help, but hiring a good accountant and a good attorney can be crucial to the success of the business.  Here are a just a few situations which using an attorney is advisable:

  1. Determining and implementing the proper business structure.  Should you be an LLC or an S-Corp or a C-Corp?  If you have partners, have you put together an operating agreement?  Do you need a buy-sell agreement?  
  2. Do you have Intellectual Property?  Do you need a trademark, copyright or patent?
  3. Do you have employees?  Do you need employment contracts, non-disclosure agreements, non-compete agreements?
  4. Do you have independent contractors?  Do you need contracts for them (including non-disclosure)?
  5. Do you need contracts for your customers?
  6. If you have a storefront, are there zoning issues you need to consider before signing a lease or purchasing the property?
  7. If you are leasing property or equipment, do you understand all the elements in the lease?
  8. Do you know what licenses and business registrations your type of business/industry requires?
This is just a short list of issues that an attorney can assist a small business owner with.  We have seen several instances where a business failed because the partners didn't have a detailed operating agreement and the lack of one effected their ability to run the business successfully.  We have seen people sign leases without understanding what triple net meant (which greatly underestimated the cost of the lease) or the actual length of the lease (required renewal periods).  Finding a lawyer specializing in business law can insure that your business is set up properly from the start and that you understand everything you are signing before you sign the document.

Next week we will discuss whether you need a partner in your business start-up and things to consider when choosing a partner.

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