Entrepreneurs Need Good Legal Assistance
A couple of months ago, this column discussed the need for an entrepreneur to choose an accountant as part of his business team. This column addresses the need for a good attorney to help with legal issues when starting and running a business.
As with choosing an accountant, it is critical to find an attorney who specializes in working with entrepreneurial ventures. A good criminal attorney may not know much about corporate or commercial law.
Referrals are a good place to start when shopping for a lawyer, according to Diane Hoty-Bliss, an attorney in Fairview Park. “The entrepreneur should discuss the length of practice that the prospective attorney has in the specific area of corporate law and the portion of his practice that said attorney devotes to this area," Hoty-Bliss stated.
Jim Gucker, an attorney and Business Law Instructor at Tiffin University, says, “When choosing an attorney for business representation, I would suggest a recommendation from a local business owner or other professional, such as an accountant or insurance agent. A personal referral is usually the best source. The appropriate questions to ask a referring party: Is he or she prompt and responsive? Does the attorney charge reasonable fees?”
Many Legal Facets
Forming a corporation is one of the first steps to creating a new business. Entrepreneurs need to incorporate to protect their personal assets from liability. “The attorney should discuss with the entrepreneur the legal and tax ramifications of the different types of entities that the entrepreneur may want to set up for his or her particular type of business (i.e., Limited Liability Company, Corporation, Partnership etc.). Once this is established, the attorney would set up the Articles for the business, file the Articles with the Secretary of State, and prepare a complete record book for the entrepreneur, including the obtaining of an Employer Identification Number with the IRS,” stated Hoty-Bliss.
Gucker added that another important issue an attorney may have to address is multiple shareholders or owners. This can include creating buy-sell agreements and succession plans. Insurance issues are also critical to starting a business as well as determining what type of insurance should be obtained. Liability insurance and property and casualty insurance may be necessary for a business.
Smaller law firms can be very useful for entrepreneurs in the early stages of a business. They will often have lower hourly rates compared to large law firms. In addition, the level of service with smaller law firms can often be superior since the entrepreneur will more likely be dealing with an experienced professional, as opposed to a young associate in training at the larger firm.
Finally, the business owner should also choose an attorney based on his or her personality. The needs of different entrepreneurs can vary widely, depending on the type of business. Different attorneys may be required for different legal services. For example, for business formation concerns, an entrepreneur should select an attorney who can provide advice on the advantages and disadvantages of the different types of business forms. If the business has employees, an attorney can assist in the creation of employment agreements and employee handbooks.
If the new business involves unique products or brands, the business may need to work with a registered patent attorney who specializes in inventions, trademarks, and copyrights. If products of the new business are to be manufactured outside of the United States or exported, the advice of an attorney with experience in import/export regulations may also be required.
Good attorneys are usually busy. However, they will make time for good clients. “The well-established attorneys will also have contacts in specialized areas of law with which the entrepreneur may need assistance such as patents, trademarks, copyright issues, personnel issues and tax issues,” Gucker said.
Hoty-Bliss concluded it is in an entrepreneur's best interests to receive legal counsel during the process of establishing a new business. “Going forward, the attorney should continue to serve as a consultant to the business and should handle any future business needs and advise the entrepreneur.”
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