Is it more important to hire a lawyer or accountant?
As a small business, is it more important to get the advice of a lawyer or accountant. There are various questions, such as our choice of legal entity and making sure we are taking the right steps with our business, that seem to be both legal and accounting of nature. I would prefer not to hire two experts right now. Which type of expert would be more appropriate at an early stage?
Hiring an accountant is more important than hiring a lawyer for a small business.
There are two big reasons for that:
1.) You need an accountant on a weekly, bi-weekly and monthly basis. You don't need a lawyer every day.
2.) An accountant would keep a tab on your company's financial ins and outs. On the other hand, a lawyer might make company policies that would comply with local law.
In short, hiring an accountant is important than hiring a lawyer. Eventually, you would need a lawyer.
Why a Small Business Lawyer Is as Important as an Accountant:
Every new business needs two very talented professionals right from the start. The first is an accountant. The reasons are pretty obvious. But many don’t see the importance of a small business lawyer as well. So they put off hiring one until a legal problem appears.
A Small Business Lawyer Keeps You out of Trouble:
As mentioned before, most people choose to put off hiring a lawyer until it’s too late.
They Have Connections and Other Clients like You:
The right lawyer for you has experience in your industry. A small business lawyer is a professional when he or she knows the ins and outs of your industry.
They Communicate Well and Are Trustworthy:
You should always follow your instincts when hiring an attorney. With a professional small business lawyer, you should always speak freely.
They Offer Security and Protection:
You need to protect your business’s logo, name, or brand through trademark and copyright protection. And it will be better for an experienced small business lawyer to take care of it.
How to Determine When to Hire an Attorney versus an Accountant:
Here is a basic test, to help you decide when to hire an attorney versus an accountant:
-Does the objective involve a specific financial amount or involve the IRS? Use your accountant.
-Does the objective involve a third-party (other than the IRS)? Use your attorney.
Here’s another test for you: If your attorney or your accountant disagrees with the above-mentioned test, it may be time to switch accountants or attorneys.
Project Manager from Essay4Students.com
No doubt, a lawyer should be the first choice of every startup at the early stage of business. You can deal with accounting part later on by collecting all the financial documents, maybe by hiring an in-house accountant or accounting outsourcing.
As a smart Entrepreneur, you really need to know that in order to make your business grow, first of all, it has to be safe. You need to have a lawyer and at the same time an accountant for your bookkeeping.
Wish you the best, Colette Hamilton!
Both lawyers and accountants have their own importance as they are specialized in their particular field and trained in it. As accountant had not undergone the training of legal analysis or law and they do not have a license too. Accountant work in the terms of financial and paperwork includes taxation and how to maximize your tax deduction. Similarly the lawyer is the one who had trained in the art of legal analysis or law. So we cannot compare them or substitute them in each others place. As they are specialized in their field. For early-stage financial planning, it is a must that you hire an accountant, but you will also require a lawyer for legal advice on starting your business. To find a business lawyer, visit http://www.tarabay-gemayel.com.
In the compliance world, lawyers and accountants are strange bedfellows. Sometimes they need each other, and sometimes they do not. Each has advantages and disadvantages. Working together, you get both.
Lawyers and accountants have another significant difference – lawyers have to advise company witnesses of their Upjohn rights, which may cause the witness to seek their own counsel. Accountants do not have to advise company witnesses of their Upjohn rights and can question the witness. Of course, the witness can seek counsel anytime even if not advised of the right to do so.
With pluses and minuses and pros and cons, there is a good solution, which many companies follow. Some do not and it is hard to understand why. A company can maximize benefits and minimize downsides by retaining both, and doing so through the attorney. What do I mean? The company should initially retain the attorney, and then have the attorney retain the accounting firm to provide counsel with forensic accounting services that are needed for counsel to advise the company on compliance issues. This is the proper structure for a project and must be carried out by having counsel attend every interview or interaction with company officers and employees relating to the specific matter.
Working together, attorneys and accountants can bring about optimal solutions. Companies that work with one to the exclusion of the other only increase their risks for enforcement or compliance breakdowns.
The accountant. He or she has the skill and training to help you with everything you need to get a business up and running.
Is it more important to have a left shoe, or a right one?
I know when you're starting out you want to keep yourself from getting overwhelmed, but don't mortgage your future. Accountants and lawyers perform very different functions and have very different domains of knowledge. Asking an accountant about legal matters is like asking a cop about supreme court decisions - sure, there may be some conversational/superficial knowledge, but no real understanding under the covers.
Now, you may be able to get by without a lawyer for longer period of time than an accountant, but I always advise my clients to pick a lawyer's brain early on. You'll be surprised how many lawyers are open to one-off (and often cheap) informal meetings to run you through the minefield of getting started. You don't need anyone on retainer, but unless you've got a lot of business experience, you'll quickly find that there are aspects of your corporate bylaws, ownership structure, etc. that you wish you had advice for.
Lawyer always comes first. Accountant is helping to sort out your finances. Lawyer keeps you out of jail!
I would suggest hire an experienced accountant who has dealt with tax and other legal issues for immediate advice, because for the health of the company accountant is a must for you to focus on business development. Lawyer services are not required on day to day basis you can hire them for case to case basis that would be a more economical and prudent strategy.
Lawyer. Accounting software can replace an accountant, but there aren't programs to replace proper legal protection.
A lawyer for several reasons being:
In broad terms an accountant is always looking into the rear view mirror occasionally looking out the front.
A lawyer is the opposite.
Who owns the business and how do we agree to run it?
It sounds simple but once the business is successful the arguments generally begin.
So both the ownership structure and a partnership agreement stop any future issues.
Legal liability for all of the various parts of your business.
I had clients who bought a property development site and their lawyer recommended they create a special purpose company to just do that project.
Two kids illegally riding quad bikes pushed down a 1.8 metre high chain link fence to get onto the property and then flipped the quad bikes on themselves. They were both quadriplegics and if the property had been in their own names they would have been bankrupted by the $25m awarded to the two trespassers by the courts.
Colette, that's a bit like asking if it is more important to be trustworthy or responsible. In many ways it may seem like you need both. I think the big question might be what type of info about setting up your legal entity and the ramifications of doing so one way or another you could learn from attending workshops or online info sessions from the SBA (Small Business Association) then from there, determine who might be the better professional to assist you in doing so.
Often there are ways to set up your entity online with the help of legal professionals who will walk you through the process once you decide which entity is better for your business.
I personally think it is well worth spending at least some money talking with an accountant once you get the legal aspects of what type of business you want to run ( sole proprietor, LLC etc.) because you will want to get the best tax advice asap to help you stay on top of any liabilities you will owe.
In your situation, I would rather hire a good accountant, instead a lawyer. If you are in the stage of defining the business planning for your company, which includes mission, vision, main objectives and actions to be taken, and most important of everything, to have a financial analysis of the economical results in the next 5 years, an accountant is better prepared in these items than a lawyer. For the legal aspects, you can get external services for specific items.
While there are some exceptions to be aware of, generally speaking an accountant should come first, unless you are in a heavily regulated industry like pharmaceuticals or something like that.
What most businesses do early on is hire a consultant accountant that also fills the role of providing legal and regulatory advice, and some HR functions as well. Early on, if you are hiring someone that does one of these as opposed to all three I would say you probably aren't getting your money's worth.
I would suggest an accountant 1st and foremost to help get you going...Incorporate and get going on the revenue side and as your business grows then a lawyer...
Your business entity and frequent exposures to either of the services determine which comes first as both are indispensable. If you tilt towards the legal implication more, then maybe a lawyer should step in white you find your way through your basic record keeping and elementary accounting skills however if the case is the other way round ie needing more detailed accounting expertise, then you may need to hire an accountant while legal advise is sort externally without necessarily a full time engagement pending when your company grows to that point. Let me also add here that it will be proactive enough to consider and avoid factors that may require legal back up such as poor service delivery or product expectation leading to a legal suit against your company hiring a lawyer in this case would even cost you more. To avoid this, practice excellent customer service and maintain company/ brand integrity as the case may be.
Other brilliant ideas have been shared here which also gives you an insight on all perspectives. Good luck!
Start with a small business oriented accounting firm. They focus on strategic alignment and consultation with business owners in addition to taxes and financial reporting. Depending on size and complexity of your business, fees can be less than $1,000 per year. They want you to grow with them. They will also tell you when you need a lawyer's input and can refer you to a trusted, small biz experienced JD.
Some incorrect answers here, ugh.
Let’s start with what is correct. I agree, if you can’t afford both an attorney and CPA then maybe should hire neither. And I don’t see where you indicate that you have already decided on your organizational structure (i.e. sole proprietor, partnership, LLC, S Corp. etc.) so a CPA or an attorney can help with this decision though when you need legal documentation (e.g., contracts, LLC operating agreement, etc.) then a good attorney is a must and always get a referral. I also agree you will probably need a CPA to get your financial accounting set up unless you are going to do your books yourself which I do NOT recommend. The comment that the cost of experts is well worth the money to prevent headaches in the future is on point.
Incorrect answers: you do not automatically assume an LLC or an S Corp is the best choice as entity choice depends on many factors and an LLC is not as others incorrectly assume as straight forward to set up and operate (though it is easy to form and structure incorrectly). The comment that you really don’t need a CPA until you are ready to file taxes is incorrect for so many obvious reasons. Give me a break, learning quick books to keep your records and turbo tax to file your returns? This is a waste of your time as if you’re serious about your business, your time should be spent on growing the business not learning these new skills!
Also, the comment that if you have never setup corporate books in your state, documented corporate minutes and notices correctly, your corporation may be pierced is half correct as these rules also apply to LLC’s. There are many LLC cases that look at rules similar to the corporate “piercing the veil" rule and apply these rules to LLCs. Unfortunately the party’s who set up the LLC also fell for this nonsense and had the LLC entity easily pierced (http://www.baylor.edu/law/faculty/doc.php/242039.pdf.).
Whether you set up an LLC or Corporation you must follow certain rules and an attorney or CPA can help you make sure either the entity is not pierced and more important, is the correct entity to use. The bottom line is: hire an expert (both a CPA and attorney) as they are well worth your time.