Many entrepreneurs start their own business to follow their dreams and fulfill their passion. Following your dreams can be deeply fulfilling in ways that working for someone else might not provide. You are in charge of creating your business from the ground up, allowing you to shape your company into something you’re proud of, and potentially something to pass on to your children as a legacy.
Starting a business from scratch can be one of life's most exciting—and challenging—efforts. We’re here to help by asking and answering the questions you might not have thought about yet: personal protection, taxes, compliance, intellectual property, potential risks, and even lawsuits.
Key Facts and Figures
The U.S. Census Bureau revealed that close to 5.5 million businesses were started in 2023. The U.S. Small Business Administration (SBA) reported that there are 33.2 million small businesses in the U.S., which make up 99.9 percent of all American businesses. According to the Bureau of Labor Statistics, 23.2% of businesses that opened in March 2022 or later failed within their first year. Despite facing significant employment declines in early 2020 due to the pandemic, small businesses have rebounded, recovering about 60% of those job losses by March 2022. However, 40% of small businesses still cited labor needs with millions of job openings for small establishments.
Do I Need a Lawyer to Start a Business?
It’s a common question for any entrepreneur. Business owners often wear many hats, but one frequent mistake is trying to do everything themselves. This approach can divert time from business goals and slow progress. Successful business owners recognize their strengths and delegate tasks accordingly.
Why Does a Small Business Need a Lawyer?
Protecting Yourself and Your Family’s Assets
Incorporating your business is one way to protect your personal assets from liability. However, merely filing articles of incorporation or organization isn't enough. The business entity must be properly formed and comply with legal formalities. You must also keep and operate the business separately from your personal finances. These steps are fundamental for initial protection.
Contract Drafting and Negotiations: Avoid Oversights!
A business attorney can draft standard contracts for dealing with customers, clients, employees, and suppliers, and help you understand contracts presented by other parties. They ensure that agreements provide adequate protection, include indemnification clauses, and have clear, fair terms. Investing in a business attorney to draft and review contracts can safeguard your business from potential legal issues.
Buying or Selling a Business
Buying or selling a business involves numerous legal implications. A business attorney can conduct due diligence, advise on whether to buy stock or assets, draft acquisition and purchasing agreements, and handle the transfer of necessary licenses and permits. Their expertise can save money and avoid liabilities.
Licenses and Permits
Starting or acquiring a business often requires various licenses and permits. A business attorney can guide you through the application process and ensure that all necessary documents are filed correctly with the relevant boards and government offices.
Tax Liability
The business entity you choose impacts both personal and business taxes. Before starting, it’s crucial to address preliminary tax questions. If you plan to hire employees, you’ll need to set up payroll and handle payroll taxes. A business attorney, working alongside a Certified Public Accountant (CPA), can help navigate these tax issues and set your business on the right path.
Intellectual Property
If your business is based on a unique product or design, protecting your intellectual property is vital. This includes registering trademarks, patents, or copyrights for your designs, logos, or inventions. A business attorney can help you protect, preserve, and enforce your intellectual property rights, ensuring your creations are legally safeguarded.
Employee Laws and Policies
Hiring employees and expanding your team involves complying with various regulations and laws. A business attorney can guide you through the complexities of hiring, prevent discrimination claims, ensure proper classification of employees, and help you adhere to state and federal laws. This legal advice can prevent costly disputes and ensure smooth operations as your business grows.
Final Thoughts
Starting a business is an exciting and fulfilling journey, but it comes with its own set of challenges. While you focus on building your dream business, it’s essential to consider personal protection, taxes, compliance, and potential risks. There are many free Online startup resources available, and while they may be helpful, every situation is unique. It's normal for entrepreneurs to question whether they need a lawyer when starting a business. Successful entrepreneurs understand the importance of delegating tasks, including legal responsibilities, to focus on their core business goals. A business lawyer can provide invaluable assistance in protecting your business, preventing misunderstandings with partners, and shielding your personal assets from liability. They can guide you through the complexities of choosing the right business entity, drafting contracts, buying or selling a business, obtaining necessary licenses and permits, and protecting your intellectual property.
By working with a business lawyer and a certified public accountant, you can navigate the legal and financial complexities of starting a business, setting a strong foundation for your venture's success.
