Most Entrepreneurs want to take over the world, and while there are many sharks swimming in the corporate ocean, we agree that if you have the vision to open a business and you put the work in, you too can be successful. Success is not merely more money in the bank, but also making your own schedule and the satisfaction of controlling your own destiny. However, success does not happen merely from desire. It takes planning and proper execution. Even the most successful entrepreneurs know that they need help to get their business off on the right foot.
There are many avenues of support for your startup business, but none may be more important than setting up your legal entity correctly from day one. Having the help of a business-savvy legal advisor that you can trust is imperative for your business on day one and ten years from now. Whether you operate as a sole proprietor, partnership, corporation or limited liability company can have far reaching effects on your personal liability and profit margins.
There is a misperception that attorneys are sought out by those who are confronted with a legal issue such as a lawsuit.. As a result, most small business owners only hire an attorney experienced with business matters when confronted with a serious legal issue. However, proper guidance from an experienced attorney is a moderate cost of starting a business that often saves you money and helps your business in the long run. Having a lawyer that understands you and your business from day one will ensure that your personal assets are protected and in the event that a more serious legal situation does arrive, you are prepared.
The following is a list of some tasks that business owners should consider speaking to their lawyer about when starting their business.
Creating a business plan
If you are starting your first business, a business-savvy lawyer can assist you with the organization of your business plan so that when it is time to seek investments or apply for a loan, you are fully prepared.
Picking a business name and trademarking your name
Often, a business name may be taken already, and you may not even know. Ask your lawyer to research your business name to ensure that it is available for you to use. Nothing is worse than having to change your business name down the road when this situation could easily be averted.
Choosing the correct legal structure for your business
Your lawyer will assist you in creating a legal partnership agreement, limited liability company (LLC) operating agreement, or shareholder’s agreement.
There are ins and outs of each of the different business legal structures, speak to your lawyer about each to ensure you are starting the right type of business.
Setting up your business with the state of Illinois
When your lawyer files your incorporation paperwork with the state, you will also receive an employer identification number (EIN), which you will need for employee tax purposes.
Applying for any licenses and permits that the business may require
If your business needs specific licenses or permits to operate, speak to your lawyer about what is necessary to ensure you are operating legally.
Interviewing and hiring employees
Federal and state anti-discrimination laws that regulate the hiring of employees can be hard to navigate. Speak to your lawyer about the types of questions you may want to ask in an interview. Knowing the laws will be advantageous for you to avoid any legal issues down the road.
Submitting necessary IRS forms
Having the assistance of a legal expert through your first year of business filings will ensure that you are on the right track for the future.
Documenting corporate and company meetings
Putting a plan together to record the minutes of your sessions will ensure that you are protected down the road when records are needed.
Hiring independent contractors and contracting with vendors
Creating a legally binding contract for contractors and vendors is essential when you are faced with a breach of contract. Speaking to your lawyer about contracts is an incredibly vital step to ensure that your best interests are always protected.
Drafting employee policies, handbooks, non-compete, non-solicitation and non-disclosure agreements.
Business operates more efficiently, and you are better protected from employee negligence when you have definitive your terms of employment.
Creating contracts for use with customers or clients
When you make a deal with a customer or client, it is imperative that your contract is legally binding to protect your business. Speaking to your lawyer about your contract with your clients is essential to protect your business.
Creating a buy-sell agreement with partners
If you have multiple owners or partners, a buy-sell agreement between all parties should be created upon incorporation to assure that the business is protected when a partner wants to exit the business. Every minute that your business does not have a buy-sell agreement, you are at financial risk.
Updating any partnership, LLC, or shareholder’s agreements under which you are currently operating should be reviewed by your attorney.
All agreements should be legally binding and protect all parties; any update of these business agreements should be drafted and or reviewed by your lawyer.
This list does not represent all of the legal needs of a small business; however, we hope that it does help give you an idea of the type of issues a company deals with over the course of its lifetime. Deciding to speak to an attorney when you are starting your business will ensure that down the road when you need an attorney, you have a trusted advisor already familiar with you and your business.
Having a trusted business-savvy partner is one of the best investments you can make in your company’s future.
While you certainly need to retain an attorney for the serious legal issues, your emphasis should be placed on preventing any legal issues from coming up down the road. Discussing your business startup with an attorney who understands the needs of small businesses will certainly help down the road and reduce any legal costs down the road.
To prevent unnecessary attorney costs, consider a consultation arrangement with one of our attorneys. Such an agreement would entail you doing most of the legwork of research and the attorney providing legal review or guidance.
There are hundreds if not thousands of self-help and online sources to create a contract with a vendor, but they rarely go far enough to protect you and can be vague and may be more trouble than they are worth. You want to discuss your contract with someone who is a business-savvy legal expert, not some website.