The Importance of Retaining a Startup Attorney For Your Business
Written by: Natalie Klyashtorny
When beginning your journey as a small business owner, finding the best people to work with is of the utmost importance. One mistake that too many new business owners make is not hiring a lawyer until a problem arises, such as a lawsuit. An experienced startup attorney can be of great help in avoiding lawsuits and other legal trappings before they even rear their head, saving you time and money. A startup attorney is an essential partner to a new business, making sure you are in compliance with applicable legal business/industry requirements and preventing legal problems that could hurt your business down the line. Starting a small business is an exciting career step and the best way to avoid violating the law unknowingly is to hire a startup attorney who understands your state’s business laws and best practices inside and out. Below are just some of the ways a startup attorney can help your business meet its full potential.
Understanding Your Taxes
While no two startups are alike, there is one thing they all have in common: at some point, every business will have to pay taxes to local, state, and federal authorities. If you either fail to pay your taxes properly or neglect them entirely, you will quickly find yourself in the crosshairs of the IRS. And being in that position is one of the fastest ways to lose all of the start-up revenue you worked so hard to earn. This alone is reason enough to enlist the expertise of a start-up lawyer. In addition, a knowledgeable startup lawyer will be able to identify when you are paying taxes for the same item twice, a common mistake that novice business owners make.
Establishing Your Business Structure
Obtaining a business license is one of the first, most important steps in making your dream a reality. This means establishing your business structure by choosing from the following options:
- Corporation – Sometimes referred to as a “legal person,” a corporation is an entity recognized by the state as being distinct from company owners. Corporations are granted many of the same legal rights individuals receive, such as the right to enter into contracts, own assets, loan and borrow money, sue and be sued, hire employees and pay taxes.
- Limited Liability Corporation – An “LLC,” as it is commonly known, is a corporation in which the company’s owners are not held personally liable for any taxes or debts the company incurs.
- Partnership – This is an arrangement between two or more parties to enter into business together and share the resulting profits according to previously agreed-upon shares.
- Sole Proprietorship – This is an unincorporated business with only one owner who pays personal income tax on any profits the business earns.
If you choose an option from the above that does not suit your business structure, you could end up being liable for taxes and business debts you did not even see coming. Thus, it’s vital to assess your startup’s goals and finances in detail with an expert startup lawyer before you make this important decision.
Properly Setting Up Your Insurance
The mere existence of a startup automatically brings with it a host of insurance liabilities. As the owner of the startup, you’re responsible for obtaining proper insurance to cover:
- Slip-and-fall accidents endured by customers who visit your start-up’s brick and mortar location
- Slip-and-fall accidents endured onsite by your employees
- Various employee claims, incidents, and disputes
- Any physical products you sell or equipment that gets utilized as a part of your daily operation
- Automobiles, if your start-up operations require deliveries or the transportation of people and/or goods
Unfortunately, your startup’s multiple insurance needs can not be covered by a blanket, one-size-fits-all plan. You will have to purchase several different plans. Experienced startup attorneys will know the ins and outs of business insurance and will be able to advise you as you select the right plans for you and your company.
Advising Your Handling of Employees
Hiring employees to work for your start-up invites an exhausting laundry list of legal issues, such as:
- Obtaining an Employer Identification Number (EIN) from the IRS
- Finding a balance in which you run thorough background checks on prospective employees without invading their privacy rights
- Drafting employee agreements that clearly spell out all the terms and conditions of employment, thus protecting you from most employee-related disputes or incidents that may arise
- Ensuring that you follow compensation laws to the letter
- Understanding the crucial difference between what constitutes an employee vs. an independent contractor
Even a slight miscue with any of the above could land you in trouble with the IRS, or even worse, in court, and utilizing the skills and experience of a startup attorney can help you avoid these issues as you build out your team.
Overseeing Your Startup’s Funding
Securing upfront capital is obviously very important for any startup. This funding can come from a wide variety of sources, each of which will come with its own unique legal specifications. A seasoned startup lawyer is likely to have extensive experience representing entrepreneurs and investors alike. This makes them particularly adept at helping you negotiate pivotal matters such as your investors’ voting rights and stake in the start-up, a crucial negotiation that could save you from getting bilked out of future revenue. Additionally, a startup lawyer with a vast network of trustworthy investors that they have worked with before can be of great benefit to your business.
Remaining Compliant With Regulations
It’s likely that your startup will have to remain in good standing with some regulatory bodies like the SEC, FTC, FDA, etc. And each of these organizations operates according to thick rulebooks filled to the brim with mind-numbing legalese. Having a startup attorney in your corner guarantees that your startup’s daily operations always comply with the necessary regulations and that you avoid the substantial fines that result from compliance issues.
Our Team Can Help
Running the daily operations of a new start-up is difficult enough as it is. Why waste your valuable time and energy, not to mention put your startup’s good standing at risk, by struggling to address legal matters far outside of your element? At Nochumson P.C., we are more than legal counsel. We are people serving our neighbors and community in Pennsylvania and New Jersey. Knowing that real communication between real people can help lead to real positive results, our team of attorneys are available 24/7 to help answer your legal questions and to fight for you with skill and fortitude, whatever the case may be. When you hire us, you can expect a sensible and cost-effective approach to legal counsel. We think fast, think ahead, and get things done. Contact us today or call us at (215) 399-1346 to see how we can represent you.