If you own a small business, chances are you have an accountant, insurance agent, and maybe even a business mentor to advise you. But what about a business attorney? Granted, you probably won’t need one on a day-to-day basis, but there are times when should contract with one. Here are six scenarios when you should use the services of a business attorney.
1. You’re Deciding How to Structure Your Business
One of the first things you will have to do as a small-business owner is decide how to structure your business. Your options include sole proprietorship, partnership, LLC, corporations, and nonprofit. The decision you make will affect your exposure to personal liabilities, tax obligations, setup fees, and ongoing expenses, as well as how you can legally acquire funding. When you consult with an experienced business attorney, you will receive the guidance you need to make the right decision for your business. In addition, the attorney can help you create and, when necessary, file the required documents.
2. You’re Dealing with Employee Issues
There are many occasions when you should consider hiring a business attorney for employee-related issues. Here are some examples.
When deciding whether to hire employees or use independent contractors, there are very specific laws you must adhere to. A good business attorney familiar with those laws can help you stay out of trouble with the IRS.
When working with an independent contractor, you will need to draft an agreement that outlines the arrangement. A business attorney can draft one that is favorable to your business. If you already have an agreement, or want to use a boilerplate agreement, the attorney can review it and ensure that it’s in your best interest.
Consult an attorney before you hire or fire employees to ensure you don’t put yourself at risk for a discrimination lawsuit. For instance, there are certain questions you can’t ask during an interview, and your attorney can advise you on what these are. In addition, if you find yourself faced with an employee lawsuit, you will need to hire an attorney to protect your interests.
3. You Are Drafting or Negotiating a Contract
Chances are, you will enter into one or more contracts while in business. An attorney can help ensure you don’t sign one that will put your business in jeopardy. Attorneys are experts at rooting out problem clauses and identifying when additional language needs to be added. For instance, if you sign a contract without a dispute clause, you might find yourself in a lawsuit when mediation could have solved the issue. In addition, if you have already executed a contract and the other party has breached it, an attorney can point out your options and prevent you from doing something you may not have the legal right to do. For example, you may want to withhold money when the other side breaches, but the contract may not allow that course of action.
4. Local, State, or Federal Government Files a Complaint Against Your Business
If any government entity is investigating or has filed suit against your business, you need to have a good attorney on your side. The reasons for these types of investigations or suits vary widely. For instance, your state’s labor department may investigate a claim an employee made against you, or the IRS may not agree with the numbers you submitted on last year’s tax return. Recently, a business in Wisconsin was sued by the federal government because it fired workers because they didn’t possess adequate English skills. An attorney can plan a course of action to help you deal with issues like this.
5. Environmental Issues Impact Your Business
If an environmental issue arises that involves your business, you need to consult an attorney. These issues can arise from manufacturing, waste disposal, emissions, and the development of raw materials. Other times, your business may not be directly involved, but could still be affected. For instance, if you buy a piece of land, and later find out it contains hazardous materials beneath the surface, you will need an attorney to sue the seller so they will be responsible for the cleanup costs.
6. You Are Negotiating the Sale of Your Business or Purchasing One
When you buy a business, you should work with an attorney to help with the more complex aspects of the transaction. For instance, a good attorney will understand how to value a business, write acquisition and purchase agreements, do due diligence, and transfer permits and licenses. Likewise, when you sell a business, an attorney can help you get the most value out of your business, ensure that the stock transfers are done correctly, help vet buyers, and play a role in negotiations.
A good business attorney can be a small-business owner’s best friend in certain situations. If you don’t already have a relationship with one, think about finding one now so you will know who to call when the need arises.