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When Should You Hire a Lawyer for Your Small Business Needs?

Kathleen M. Stotish, Esq. focuses her legal practice on business transactions and commercial litigation. Ms. Stotish gets great satisfaction out of assisting small business owners with the often complicated process of establishing and maintaining their business entities. She has drafted, negotiated, and reviewed a wide variety of partnership and joint venture agreements, management and operating agreements, asset purchase agreements, and many other contracts. Ms. Stotish’s articles can be found on LinkedIn and on the firm website of the Law Offices of Jonathan Gelber, PLLC.

With the growing number of web-based businesses offering relatively inexpensive online legal services, and particularly for small enterprises, it comes as no surprise that many individuals question whether they actually need a lawyer to help them with their various small business needs. And, while there are certainly a number of legal business issues that individuals can handle on their own, there are also many situations when it really is “time to call a lawyer.” How then, is one to know what they can handle on their own, versus when, and why, it is actually time to seek advice from a small business lawyer?

The Legal Structure of Your Business

When starting a small business, it is important to know not only the very different ways that a business venture may be structured (incorporation, limited liability company, partnership, sole proprietorship, etc.), but also what the implications are of each of those various structures. In deciding how to structure your new business you will need to consider the number of business owners, whether those owners will have any personal liability obligations, whether the business will issue stock, how the business will deal with federal, state, and local taxes, and the general simplicity or complexity of the business entity itself. After evaluating at least the above listed considerations, and determining how to structure your business, you may, in fact, be able to move forward on your own. For example, if you have decided that your business will be a sole proprietorship, you will likely be able to initiate the business without the assistance of an experienced attorney. If, however, your business will be structured as a partnership or corporation, there are many variables to consider – such as how the entity will be taxed and viewed by creditors, among other things – making it wise to consult with an attorney before moving forward on your own.

Registering Your Business

After deciding on the legal structure of your business, regardless of that structure, the business must be registered in accordance with state law; in Virginia, you must engage and report to the Virginia State Corporation Commission. Similarly to deciding the legal structure of your small business, if you have decided on a sole proprietorship, you may be able to move forward with registering your business without the help of a lawyer. However, if your business will be incorporated, it would be prudent to consult with a lawyer, as he or she will not only be able to tell you exactly what information is required to register your business – such as an Operating Agreement and Articles of Incorporation, as well as naming a Registered Agent – and make certain that all of the required documents are accurately completed and filed, but will also ensure that you have registered with all of the appropriate offices – and there can be many, particularly if your small business will be employing other individuals!

In addition to initially registering your business, there are a plethora of ongoing filings that, if missed or otherwise forgotten about, can result in huge problems for the small business. By means of example, failure to timely file annual reports or other documents can, indeed, result in the business entity falling out of good standing with the state corporation commission, or even opening its owners up to potential personal liability for corporate actions. As such, and because the sheer number of required compliance tasks, when coupled with running your business generally, can be overwhelming, it is wise to at least consult with an attorney so as to ensure that you know not only what various filings are required, but also how and when to complete those filings. If your small business is a corporation, there are even more compliance tasks – and more complex ones at that – to be aware of, which often makes a lawyer’s involvement crucial.

Actually Doing Business

Once your small business has bee registered, and is officially “open for business,” situations may still arise in which you find yourself questioning whether or not you should call a lawyer. For example, perhaps you have decided to work with another individual or small business, and need to create a contract or some form of management agreement. Of course, there are plenty of websites that offer to do just this, or you may feel that you are able to draft a perfectly acceptable contract on your own. However, should you do so without the assistance, or review, of an attorney, sometime down the road you may realize that your decision to rely on an online document template, or to create the document yourself, has resulted in a contract that is open to various interpretations, does not protect you in disputes, or is otherwise less than ideal. Conversely, spending a bit of time and effort in enlisting the aid of a lawyer from the start will likely result in the creation of a stronger, sounder document, which not only addresses your specific needs, but also provides your business with a higher level of protection.

When a Small Business Lawyer is a Necessity

Consider then, the alternative positions that you could find yourself in when a dispute does arise, depending upon whether you took it upon yourself, or relied on an online template, to draft your document, or, on the other hand, worked with an experienced attorney to create the disputed document. There truly can be little doubt that, in the former case, you will likely need to consult an attorney in order to figure out how to deal with the situation and come out ahead. If, however, you spent a bit of time and effort in enlisting the aid of a lawyer from the start, chances are that you would have been able to avoid the dispute or problem altogether. As such, and particularly in light of the various complexities associated with running one’s own business, the fact that one would proceed forward without the consultation of an attorney is simply astounding.

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