Small Business Pitfalls: Why Attorneys Make Cents – Part II

In my last post, I began making the case for retaining a qualified attorney to help you start and grow your business. You know by now the complexities of business law but may be still stuck on price and value. To you, I offer some of the insights I’ve gained that illustrate why it’s cheaper in the long run to have an attorney on your side.

Counting the Costs

The hazards of starting and running a successful small business are many. And frankly, they are all really expensive. Startup clients often call me midway through their attempt to start an LLC. They’ve done something wrong and they’re stuck. More often than not, charting the right course from the outset is a lot cheaper than untangling a mess. I also get questions down the line from established small business owners who’ve yet to understand when they are signing a document, they can be representing both themselves and the company — setting both up for liability.

Another source of panic calls I get is from people who’ve set up with the wrong structure, are in trouble and need help keeping their personal assets separate from company assets. I also counsel clients on choosing the proper insurance.

Furthermore, licensing requirements are another source of pain for new businesses caught unawares in legal dramas. For example, if a contractor goes into business as a landscaper and doesn’t have a contractor’s license, he can’t sue if he doesn’t get paid. I don’t think a lot of people know that. You may think you can just open a business and start working. But a contractor, for instance, has to have a bond to be licensed with the state of Washington for a minimum amount of $6,000.00 or $12,000.00, depending on the type of business.

Been There, Still There

One of the biggest benefits of developing a long-term relationship with an attorney is that he or she will know your company well whenever a problem arises. Waiting to call an attorney when you’re in trouble or being sued virtually ensures you’ll pay more because the lawyer will clock more hours getting up to speed. Moreover, I especially enjoy the continuity of advising on startup through to contract negotiations and as businesses grow, handling mergers and acquisitions.

If you’re going to spend the enormous amount of time required to start and build a business, and stake your future on it, you should make sure your legal foundation is solid. The myriad laws surrounding taxes, licensing, permits, new regulations, intellectual property, franchising, advertising, hiring non-citizens, contracts, operating online, environmental codes, workplace safety, acquiring and selling real estate and others are just plain confusing. The best way to ensure you start on the right foot is to sit down with a qualified attorney who explains everything in plain English and goes through the pros and cons of each issue so that you can make the best decisions possible.

Small Business Pitfalls: Why Attorneys Make Cents

Most small business owners hesitate enlisting the help of an attorney until they’re forced to. It may be a cost perception, or it may feel like an indulgence your growing company can’t afford. There are a number of reasons, however, why having an experienced business law attorney at your side makes not just sense, but cents.

Here’s the first of a two-part series offering a number of reasons it makes the most sense to have an attorney right from the start.

Avoiding Unnecessary Complications

From the moment you decide to start a business, you begin reaching out to experts in a variety of areas to help you make sure you start out properly. Hiring the right attorney is likewise a sound investment in the future of your business. Working with new business owners is perhaps one of the most enjoyable aspects of my practice, because I can help you bring great ideas and exceptional talents to a waiting market while avoiding the snares and legal pitfalls that await you as you navigate the minefields of running a profitable operation.

Right Business Structure

My first step in helping a new business is to consult with you and discuss the different options available. Choosing what type of entity: corporation, limited liability company, or general partnership, is a crucial step. While most new business owners operate from the assumption that they may have to form a corporation, I work with my clients to understand the many reasons why an LLC can be a much sleeker way to do business for many, avoiding the annual reporting requirements while still getting many of the tax advantages of an S corp.

Filing Requirements and Contract Negotiations

When starting a new business, it’s absolutely crucial to understand the paperwork required - requirements not only from the IRS but at the state and local level too that you might not even be aware of.

I really appreciate when clients come to me asking for guidance about employment issues and contracts. Constantly changing laws have made the employer–employee relationship more complex, especially for businesses that hire independent contractors. If the contractor-employee line is crossed, it can create an IRS nightmare and an unpleasant exchange with the Washington Department of Labor and Industries. Not only will carefully considered policies and practices help your business avoid litigation, but they allow you to instill a sense of trust and leadership that will help you as you grow. When you care about your people and your partners, you must think about your legal relationships with them.

Next month, I’ll share more about the cents in hiring a business attorney.