Starting a business can be exciting and challenging at the same time. There’s a lot involved between raising funding, registering the business, and hiring your first employees.
To ensure you get your business off to a good start, it’s important to meet with a business attorney. They can help answer questions about potential legal risks and how to minimize them. In fact, consulting a lawyer could be one of the best business decisions you ever make!
Don’t know what to ask your business attorney? Here are some questions to start with:
1. What business structure should I choose?
One of the first decisions founders need to make is what type of business entity to form. A business lawyer can help you choose the right one. You have many options:
- Sole proprietorship. This means you are the sole owner of the business. Popular among freelancers, this is the simplest business structure because it doesn’t require registration. Keep in mind, however, that sole proprietors are personally liable for any business obligations and debts.
- General partnership. This is the same as a sole proprietorship, except that instead of having only one business owner, you have multiple—all of whom can be held legally responsible for business liabilities.
- Limited liability company (LLC). This structure holds the owners separate from the business, which means owners don’t risk their personal assets if the business fails to meet its financial obligations.
- C-corporation. This is like an LLC, except that it doesn’t have business owners. Instead, the business is owned by many shareholders.
- Limited partnership (LP). Also similar to an LLC, an LP distinguishes itself by being run by one or more general partners.
- Non-profit organization. This is an organization that doesn’t generate a profit. Instead, it works toward a specific public mission, such as contributing to charitable, educational, or religious causes.
It’s important to know these different business structures because each is regulated and taxed differently. Weigh your options carefully and consult a lawyer to know which one best suits your needs.
2. What do I need to know about naming my business?
Naming your business can be exciting, but you must follow your state’s laws on business names. For example, you generally can’t use a name that’s already in use. Some states also limit you to using the alphabet, numbers, and certain symbols for your business name.
The point is you don’t want your business name to break the law or infringe on the registered trademarks of other businesses.
A lawyer can help you navigate choosing a business name and then trademarking it to protect it from being used by others.
3. How do I minimize business risks?
Starting a business comes with many risks. For example, you might face employer risks, such as handling non-discrimination, health and safety, or minimum wage laws improperly. Violating these could cause you serious legal trouble. However, a lawyer can help you understand federal and state employment laws to help ensure you don’t make costly mistakes.
Other business risks include liability issues and contractor disputes. Often, forming a business entity and creating robust contracts can help mitigate these. But in some cases, it may be wise to invest in business insurance. Either way, a lawyer will be able to help you find the best solution to minimize risk.
Also, if you are ever accused of white-collar crime as a business owner, a criminal defense lawyer can defend you in court and give you the legal protection you deserve.
4. What business formation documents do I need?
When forming a business, you often file formation documents with the Secretary of State or Division of Corporations in your state. At a minimum, these documents include a Certificate of Formation.
However, you may also want to file bylaws as a corporation or an operating agreement as an LLC. These documents detail important guidelines on how your business will be operated.
A business lawyer can help you prepare these documents and make suggestions on what to include in them. For example, your formation documents could cover:
- How business decisions are made
- When and how often shareholder meetings are held
- How stock shares are issued
- How board members are selected and vacancies handled
- How committees are formed and how their leaders are chosen
- When budgets are audited and revised
- How the company will invest in Environmental, Social, and Governance (ESG) factors
5. How do I protect my intellectual property?
As a business owner, you probably have intellectual property (IP) you don’t want others to steal. Fortunately, there are ways to protect your IP. The main ones are:
- Copyright. This provides protection for creative works, so it’s especially useful in the art and publishing industries.
- Trademark. This provides protection for brand names and logos, which is helpful in any industry.
- Patent. This provides protection for specific inventions and products your business may create or sell.
Your attorney can help you determine which form of IP protection you need and then help you get it.
6. What contracts does my business need?
In business, contracts help establish trust between two parties. You need them to outline the rights and responsibilities of each.
For example, contracts can set the terms for routine transactions, employment relationships, and the sharing of confidential information.
A good contract will limit disputes and costly legal battles—whether you’re dealing with contractors, clients, or employees.
Have a business lawyer help you draft your contracts and review them regularly so that you keep your business as protected as possible.
According to the Bureau of Labor Statistics (BLS), only 80% of startups survive after one year. Only 50% survive after five years, and only 35% survive after ten years.
One of the best ways to help ensure your business stands the test of time is to have a business lawyer on your side. They can help you avoid costly mistakes that could put your business under. Set yourself up for success by contacting a lawyer today!