Top Eight Reasons You May Need Startup Attorneys

Top Eight Reasons You May Need Startup Attorneys

Most people who have a good idea and not a lot of startup cash don’t think to involve attorneys right away because it feels like something that is expensive and can come later in the process when there is something to lose.  This is because attorneys are most-often associated with those times when things go wrong, rather than helping things to go right.  Here are the top eight reasons why you should hire an attorney for your startup.

1. Your startup lawyer can make recommendations on the appropriate business type that your startup would best benefit from and put together your articles of incorporation. Incorporation creates a very important legal separation between you (the individual, or individuals forming the business) and the business you are forming.

Why is this so important?  By creating a separate business identity, you shield yourself from any liabilities such as debt or legal liability of the business.  If the business goes into bankruptcy, you, the individual, will not.  Think of the fiasco with Donald Trump and the Taj Mahal.  Donald Trump never applied for bankruptcy protections, only his business did.  That was why he could continue to live and do so well.  Moreover, if the business is sued because there was a “slip and fall” accident on the premises, you and your family are not liable—only the business.

2. A startup lawyer can help you finance your business. Financing always raises legal issues, because of the mixture of personal and business funds. A corporate or business attorney can help structure investment funds, negotiate the role of investors, and protect you as the primary force and innovator of the company from any control or takeover.

3. If your business should have intentions of issuing stock or even going public, your startup attorney can set the groundwork for incorporation and stock issuance. Your attorney will ensure that every founding member contributes to the business materially and create a vesting schedule.

4. Business attorneys will take the headache out of SEC regulations. Granted, most small businesses will not have to worry about this in the beginning. However, it is on the horizon unless you are starting your business to remain a Mom & Pop shop for its entirety.  If you do intend to grow, then this is a huge reason to bring an attorney in right away.  Complying with any federal regulation (or state) is a big deal—especially when criminal charges can be applied to people who the government feels were purposefully manipulating this system.  Securities laws are overly Byzantine and difficult to understand even for your standard attorney which is why the really large firms hire attorneys who are specialized in this practice area.

5. Your startup attorney can create a partnership agreement that is fair and legally rigid to protect all interests from the beginning. Often, the “handshake” approach to starting a business can create trouble later as memories fade and emotions come into play. Having an attorney document and create a formal agreement is the best way to not only prevent problems but retain friendships as money comes into play.

6. Employment law is a subset of business law and carries with it its own set of considerations. Having an attorney help you obtain the proper IRS numbers to employee workers, establish work authorization protocols, and create employee agreements is vital to keeping your business on track and in the right direction. The last thing any new business needs is an audit by the IRS for potential wrong-doing.  One of the few things bankruptcy does not clear is back taxes.

7. Protecting your intellectual property and brand is vital to the life of your business. Each year Customs puts out a list of counterfeit items seized at the borders and it is upwards of 600 billion dollars, and that is just knock-off items. It does not account for the billions lost to people who appropriate design, logos, music, or content.

Having a business lawyer who understands intellectual property (IP) law and can help you create and file patent and trademark applications is worth far more than you will ever pay him or her to create them.  Being able to protect your brand’s consumer trust from people who would piggyback off of it, is not only important to your business but also to the people who might buy an inferior product.  Your business lawyer can work with you to figure out what can be trademarked, what can be patented, and how to use copyright laws to your business’s advantage.

8. It goes without saying that the -literal-hundreds of thousands of regulations created by federal and state regulatory agencies cannot be remembered or kept up with by any single business owner. It is difficult to manage a business and sit on top of legislators.  Whether it is a health-related regulation or something to do with your website’s data privacy—you are liable regardless of whether or not you were ignorant of the law or regulation.  Having an attorney retained can protect you and your business from the harsh reality of our current overly-onerous legal environment.

Most small business or startup attorneys understand that their clients are working with a limited budget and will put together flat rate or financing packages.  It is better to spend a little bit of money now than a lot later. Call our office to 305-921-0440 or email us to info@jflawfirm.com, today!

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