In this age of advanced technology and readily available information, business owners can do more for themselves than ever before. Office supply stores offer a wide selection of business and legal forms and software to help self-starters handle even the most complicated legal tasks. However, there is a huge difference between what you CAN do on your own and what you SHOULD do on your own. It is important to know which business details you can handle yourself and which require legal expertise. Before you dive into organizing and operating your business, here are some things you should know.
THINGS YOUR LAWYER SHOULD HANDLE
The most important thing for which you will need a lawyer is deciding the appropriate business form for your new business. A lawyer can evaluate your particular circumstances and advise you as to which business form will give you and your assets the most protection from liability. When you are just starting out, it seems impossible to imagine that a dissatisfied customer or a disgruntled ex-employee might ever sue you. But it can happen and, in this litigious society, happens far too often. Selecting the appropriate business form will help protect you if and when this happens and is the most important decision you will make.
Depending on the amount of assets you have and the potential for exposure in your particular business, as well as tax considerations, your lawyer will advise you as to whether you can or should operate your business as a sole proprietorship, a partnership, a corporation or perhaps a limited liability company. The formation of your business involves decisions which will be crucial to the success of your business and which will affect your business, you personally and even your family for years to come. It is therefore critical that you involve a lawyer in these initial decisions in order to get your business off on the right foot. Your lawyer can also direct you to the appropriate professionals, such as accountants or specialized attorneys, when appropriate.
If you have a business partner, each of you should consult with your own lawyer and have your lawyers work out the financial and other partnership issues involved in your business so that they are fair to both of you. Your lawyers will help you make sure that you both have the same understanding as to how the business will be operated and when and how the business may be dissolved. Your lawyers will also help you reduce your agreements to writing, which is a must for any business. This is true even if your business partner has been your best friend since you were five years old. In fact, this is especially true under such circumstances. Confirming everything in a neutral, agreed writing now will save both of you a lot of confusion, stress and misunderstandings in the future. It may also very well save your friendship and/or partnership.
A lawyer can also be a very important resource for conducting your business. He or she can help advise you as to the types and amount of insurance coverage you will need to protect your business and its assets, as well as your personal assets. Consult with an attorney also regarding any contracts to which your business will be a party. It is important to have an attorney review contacts, including lease agreements, before they are signed. Many contracts contain complicated legal language and, even if they are written in more plain language, you may not understand all of the legal ramifications of the provisions. If your company will issue stock, then it is extremely important that you consult with an attorney to make sure you are complying with federal and state securities regulations. Consult your attorney also regarding very complicated legal matters, such as copyrights, patents or licenses. For example, trademark law is an extremely complex field best left to professionals who are specially trained in such matters.
Another time to rely on your lawyer is when you get ready to hire your first employee or when you are planning to fire an employee. An employment lawyer is an indispensable resource in designing a written personnel policy that will protect you and your business. A lawyer can also advise you of the legal ramifications of certain personnel decisions. For example, if you are planning to lay off an employee, discuss it first with your lawyer to determine what steps you should take and how to handle the matter so that it does not come back to haunt you.
Finally, in most cases, if you have been sued or think you may need to sue someone, you should consult with your lawyer immediately. Lawsuits involve strict time limits and should be dealt with on an urgent basis. This is especially true in the case of employment issues or worker’s compensation issues. Such lawsuits can destroy a business and should be dealt with swiftly and appropriately.
THINGS YOU CAN HANDLE YOURSELF
Once you have consulted with a lawyer and determined the best form for your business, it is very likely that you can do most of the actual work involved in forming the business yourself. In most states, you can find much of the information and resources you will need on the Secretary of State’s website, including downloadable forms. The Secretary of State website will tell you which forms must be filed in order to organize your business, as well as the fees for filing the forms. The website will also have additional information or links which will help you learn more about your chosen business form, requirements and considerations.
There are many books on the market, which will be invaluable resources to you in forming and operating your business. Many books will contain the forms you need, as well as step-by-step guides to help you fill out and file the appropriate forms to get your business underway. Some even come with forms on CDs so that you can use them right on your computer. With the right resources and forms, you can prepare and file the appropriate formation documents with your Secretary of State, prepare and file a fictitious business name statement, if necessary, and obtain a federal employer identification number from the Internal Revenue Service. Find several good, reliable business guides and begin to build your own business reference library. Make sure the resources you use are kept up-to-date, as laws and practices change almost daily. You will find yourself referring to your library resources time and time again, even after you have been in business for many years.
You should also be able to handle simple tax and administrative matters on your own, dealing directly with city and county offices to obtain appropriate licenses and permits needed for the operation of your business. Depending on the size of your business, you will probably want to hire an accountant to deal with most financial and tax issues. However, with a little education and advice from your trusted legal and tax professionals, you should be able to handle many routine matters yourself. Even when you cannot handle something on your own, by educating yourself, you will be better qualified to make decisions and will know how to keep good records. Good record keeping is crucial to allow your legal and financial advisors to do the best job possible for you.
Once your business is formed, you will be able to handle most of the operational and record-keeping matters yourself as well. There are any number of kits and books available geared toward your particular business form, whether it is a corporation, a limited liability company or a partnership. Using these resources, you can create and maintain the appropriate records for your business, including corporate bylaws, minutes and resolutions. Utilizing forms you obtain from your attorney or through reliable resources, you can create and implement simple contracts that your business will use on a routine basis.
By educating yourself and with experience, you will be able to handle most personnel matters on your own as well, including interviewing and hiring employees, filling out the appropriate forms and keeping an up-to-date personnel file. Your local Chamber of Commerce is another important resource for new business owners, especially in this area. This organization exists to help you succeed and will provide you with invaluable information and resources. Get information on business seminars and make it a point to learn everything you can. Many business organizations and state agencies offer seminars on personnel matters, including payroll and tax laws.
There are a number of business organizations and websites especially dedicated to small business owners and entrepreneurs. Take advantage of these resources. Don’t isolate yourself. Make use of opportunities to network with other new business owners who may have had the same problems or experiences that you are now having. Find out how others have handled similar situations, what worked and what didn’t. Having an outlet to discuss and learn about such issues will also help to keep your stress level within normal limits.
KEEP A LAWYER ON YOUR SIDE
Once you are established and have become proficient at handling many matters on your own, you will still want to make sure you have a lawyer available to you, even if it’s just to run things by a legal professional now and then. When you run a business, it’s great to have a lawyer to blame things on, too. Believe me, your lawyer won’t mind one bit. For example, when your partner complains that you should just trust him or her and don’t need a written contract, you can say, “Gee, Bill, I know, but my lawyer is insisting that we do it this way.” Or when a disgruntled consumer balks at having to sign a release before you compensate him or her for a claimed loss or damage, you can say, “I know, I know, Mrs. Smith. But my lawyer won’t let me pay you unless I get this signed. You know what a pain lawyers can be.” Involving a lawyer in crucial negotiations and business relationships is also beneficial because he or she is on your side. Your lawyer can be objective and tough and protect your interests, even when you may be uncomfortable doing so for yourself.
Over time, you will learn to handle many more business and personnel matters on your own. Make sure you have a lawyer available to consult with you as new situations arise. However, once your business is well underway, you will find yourself able to manage many more things on your own than you ever imagined you could.
