People who start companies nowadays do so without a business degree more often than not. Some do so because they have a great idea and money to invest. Others have partners or family members looking to support them in their endeavors.
However, running an establishment is packed with legal pitfalls, many of which might befall you. Young, inexperienced business owners are the most susceptible, but even experienced entrepreneurs can't hold the entire law in their minds. After all, that's why professionals exist.
According to Vikramsinh Parmar, the founder of legal directory site LawTally, lawyers nowadays specialize in various fields of expertise. In some cases, you'll need a dedicated expert, but in most cases, a reliable business lawyer versed in your domain can do wonders by themselves.
Think about it - you can go solo at first, but business laws you have to abide by are different depending on the situation specifics. Learning the ins and outs of many will require professional assistance.
Let's look at various areas of running a company and how having a lawyer can help you do it right.
When you're first opening your company, you'll need a lawyer by your side to handle permits, registration, and licensing.
Some business entities must register with the state to become recognized. You might require various licenses and permits, even if registration isn't mandatory.
Type of entity
To even begin discovering all the registration and permits necessary, you first have to decide on a business form, such as partnerships, corporations, or LLCs. The structure dictates:
Legal responsibilities you're facing
The liability of everybody involved
The way it can and can't operate
Sole proprietorships are the simplest, and thus very common for new small businesses, but it's all about your idea and requirements.
Even if you feel confident about choosing among the five basic business entities, the law requirements don't stop there. Small variations among subtypes determine a lot of your legal obligations.
If you don't plan on conducting your operations only in one state or already own a company and want to expand your reach, there's a whole new area of consideration in play.
Business laws can vastly differ even between two neighboring states. Still, if you don't strictly conform to the state laws, you might lose the benefits and protections you get from them.
When you're looking for new people to add to your workforce, you need to consider whether you're looking for a regular employee or an independent contractor.
This seemingly straightforward choice has significant tax implications, which can require attorney assistance.
Even when your company is up and running, all of its operations are subject to specific legal requirements.
Most businesses need contracts. These documents serve as a guarantee of trust between you and suppliers, services, space providers, partners, investors, and even employees.
A lawyer can ensure that all your legal agreements are airtight, avoiding vague or incomplete deals that can cost a fortune or let other people take advantage of the gaps.
Different structure types entail varying procedures for raising and distributing capital. Not abiding by them can get you in legal and financial trouble.
U.S. states adopted "Uniform Laws," serving to fill in the gaps for business entities without proper documentation in place.
You can end up subject to sets of laws and regulations you're entirely unaware of unless you work with a lawyer to ensure autonomy and work at your terms.
A company's financial obligations don't stop at employees and partners. You also have to consider your duties towards the state, and its responsibilities towards you.
Various company structures provide multiple tax advantages and disadvantages and a long list of rules to follow. You might be able to file a personal tax return by yourself, but doing so for a business, especially as it grows, is quite a feat.
Plus, opening a company in this climate means that you're facing a state of instability and chaos. As you scramble to ensure your brand survives and stays profitable, some procedures might slip your mind, especially in a field as broad as taxes.
Making mistakes is a normal part of learning and developing, even for a business owner. However, a tax filing mistake can harm your company's longevity.
An experienced lawyer will help you with these. They can also point you to a specialist if they gauge you need one, especially with complicated tax laws. Plus, if they're well-connected, they'll ensure you get to work with a specialized professional quickly and easily.
Having insurance is critical, and you can work with a reliable company to ensure everything is in place. However, 2020 puts all companies in a tricky situation.
Insurance company relief was lacking during the pandemic, so it's unclear to tell what 20201 will bring in that field. There'll be a lot of challenges and potential for misuse. Having somebody proficient at the laws behind insurance can help you avoid getting tricked.
Owning and running a business can pose a risk to your finances. It could even lead to conflicts with the law for people who go around unaware of all the essential regulations.
When you launch a company, you're making yourself responsible for its operations. Personal liability means that you're putting everything you own at risk if you make a mistake. An attorney will raise your awareness and reduce such risks.
Consider this time of the pandemic as an example. Owners of land-based companies have to abide by entirely novel sets of business laws. If you break any new regulation, you’re facing a potential lawsuit, so it’s critical to understand your liabilities.
Even with understanding liabilities, mistakes do happen, and lawsuits do ensue sometimes. In that case, having a lawyer already on your team can tilt the chances to your side.
A professional already proficient in your domain will know which actions to take and the best time for them. Plus, if a lawyer constructed your business agreements, they'll already be aware of the advantages you can use to your favor to settle a legal dispute.
Imagine a vendor, client, partner, or any other associate owing you money and dragging their feet on the matter. A lawyer on your team will assist you in resolving this issue with much less friction.
People want to avoid legal trouble. So, asking a lawyer to send a request on behalf of the company will motivate immediate action, even if you don't threaten your debtor with a lawsuit. If this doesn't work, the attorney will know what's the logical next step, too.
In most cases, you'll have to work with a lawyer if you own a business, whether you have one standing by or call them in when the need arises.
This guide isn't here to scare you. It merely suggests that hiring a professional early on can prevent issues later, even if it means an extra expense each month. Don't try to save money in a field that can ultimately make or break your company.