Do you need to hire a lawyer for the initial setup of a business?
A client wants help with the initial setup of her business and submitting paperwork for her tax id and DBA on her behalf. Is this something I can do? I am a freelance administrative assistant, not a lawyer. Are there legal considerations to keep in mind? Is this something I can do for her without getting into any trouble?
As long as you are doing paper Tax ID DBA etc. You cannot draft other legal papers unless she dictates them
She can have an attorney review or draft Legal Papers
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A CPA should advise on tax matters
I am not a lawyer or accountant. I would think it would depend on what kind of business and where the person intends to have the business. if it is a small business that does landscaping with a few employees I would think almost anybody could help them get a tax number and incorporate. However if it was a medical office are manufacturing pharmaceuticals I would recommend that you bring in experts.
آNo, there is no any trouble only she shall give you the authorization letter to do the work on her behalf, once you are authorized to do the work you have to follow the procedure for finishing the work according to documents needed.
If either an attorney or a CPA have made the choice of entity determination, then yes, if you know what you are doing, there is no reason why you can't assist in the process-driven work of setting up an entity. You would never sign the papers on the owner's behalf, but would coordinate preparation, signature and filing. You should ask your client if she has confirmed with her CPA that a d/b/a is the best choice for her. As for whether a sole proprietor can have a tax ID, they are often obtained so that one doesn't need to provide their SSN to clients for 1099 purposes, or to open a bank account in the business name.
IF your client (as has been discussed here) intends to take on partners, have others invest in her business, take out a loan, enter into contracts or enter into any kind of transaction - or if they foresee any of these activities down the road, then they should be having a conversation with an attorney. People 'don't know what they don't know' and attorneys and CPAs provide a wealth of information on what to expect as you grow, risks, and sometimes, just better ways of being successful.
I do not recommend DIY services for entity formations. Most often, the people who use those services don't really understand the records that are generated from those services and never properly complete the supporting organization documents, or maintain their entity in good standing (although that's n/a for a d/b/a, which probably only needs to be renewed every 'x' years). Frequently, they ultimately wind up in an attorney's office who then engages me to clean everything up.
Rule of thumb in all business and legal matters: If you feel the need to ask if you are qualified.. you most likely are not.
It's so inexpensive to use a service, I would highly recommend it.
Also, and especially if there are two or more business owners, speak to an attorney and a CPA.
A simple DBA does not need a lawyer. But it is also no legal protection from lawsuits, etc. It is filed in your county by filling out a simple form and paying for a required newspaper ad. These can be found by an Internet search for your county.
To create a simple corporation for one shareholder is also simple. There are companies that do this that you can find on a search. They do it all. I more recommend this than a DBA. If and when this person wants to expand their company or bring in a partner, I would recommend a lawyer.
I recommend using a lawyer who can help set up the business meeting all legal requirements for state and local registration etc., and who can help understand the income tax rules for that business classification. It is a small investment that will ensure the client get's it right from the get-go.
Merely setting up a new entity (such as an LLC, a corporation, non-profit, etc.) is easy to do without a lawyer. There are inexpensive online services that can do this for you. One of my favorites is MyCorporation.com. I'm a lawyer, but I still send my clients to them, if all they need is to create a simple entity. Where the lawyer comes in is for any of the following, after the entity is set up:
(1) there are multiple owners or equity holders and you want to create a shareholders agreement (for a corporation) or operating agreement (for an LLC) to address possible disputes between owners (such as, what if one owner wants to exit, what if one dies or is incapacitated, what if they disagree on strategy or key decisions, etc.). (For a single owner of a simple LLC, this is often unnecessary until after you grow)
(2) You plan to issue options or other similar rights (such as "sweat equity" for employees or officers) and you need someone to create a stock option plan. (For a single owner of a simple LLC, this is often unnecessary until after you grow)
(3) You need a standard "template" commercial agreement to use with all your customers. (Most businesses will need this right away, even if quick and simple - preferable at low cost)
(5) You need someone to quickly review any other business contracts you receive before you sign them (such as from suppliers, leases from your landlord, etc.). (Most businesses will need this right away, even if quick and simple - preferable at low cost)
The reason you need these contracts, terms and agreements (in #3-5) is to protect your business. Think of it like insurance. You hope you never need to go to the contract to sue your customer or your vendor. but IF anything ever does go wrong, you want your liability to limited properly so you don't lose your entire business over one bad deal. Yes, your personal liability is limited if you set up an LLC or corporation. But that does not mean that you do not care at all whether your company is liable for something unnecessarily. You can still lose your entire business if your contracts aren't drafted properly and your company ends up exposed to more liability than you thought. Spending a few dollars on a lawyer is just like buying insurance. You hope you never need to "use" the terms negotiated in the contract. But you want to have them there anyway, just in case. A good lawyer can also give some business advice and share industry learnings based on their experiences (e.g., why would you want to structure your deal this way when you can structure it that way instead - that's what many of my other similar clients do).
OutsideGC is a virtual law firm with a low cost structure. We offer the same quality legal services as a big firm, at a fraction of the cost. Because we have no offices, secretaries or bloated staff or overhead, we charge about 1/3 what a big firm does, even though all of our lawyers have the same big firm experience. I am happy to chat any time for free for an initial consult if you have questions as to whether or not you need a lawyer and how much it might cost.
I wouldn't recommend you set up for her - a mistake could land you in legal troubles. I'd recommend using one of the internet services such as Incfile, Bizfilings, LegalZoom, etc. We used Incfile for less than $400 and were well pleased. Comparisons available at: http://startupsavant.com/7-business-incorporation-services.
As others have mentioned, it really depends on the situation regarding the need to hire an attorney for the initial setup. Generally, the more people involved in the initial setup (i.e., co-owners, initial investors, employees, partners), the greater need for legal guidance.
Also, if the industry in which the company is going to be involved has licenses and regulations that need to be followed, then an attorney would be quite beneficial.
Finally, it sounds like your client is wanting to form a sole proprietorship which, although being relatively easy to set up, does not provide the liability protection as other forms of businesses. It may be helpful for the client to discuss options with an attorney before proceeding.
There may be a local SBA source with whom you can discuss in more detail - https://www.sba.gov/tools/local-assistance