Is An Attorney Essential When Starting My Business?
Starting a business is both exciting and anxiety-provoking. People who start their own businesses like to do things for themselves, so they might consider trying to launch the start-up without using a lawyer. If you find yourself in this situation, you might be wondering, “Is an attorney essential when starting my business?”
Sure, you can find lots of information online, but it is unlikely that you will know where to begin your online searches unless you are an experienced entrepreneur. Even if you have started other businesses before, the laws change constantly, so what worked before might make you end up having to pay fines and penalties. A Columbia, Maryland start-up attorney can advise you on the relevant regulations that you need to follow.
Licensing and Start-Up Companies
Your town and county might each require you to get licenses to do business. Some types of companies have to obtain multiple licenses. If you do not get and maintain the proper licenses, government agencies could shut you down and put you through the gauntlet of inspections and hearings, while you lose money every day you are not open for business.
Taxes and American Small Businesses
People who have never owned a business are often shocked at the many types of taxes that businesses have to pay. In the past, you were likely familiar with paying income tax, sales tax on things you buy, real property tax on your home, and taxes or registration fees on your car.
As a business owner, you must withhold Social Security and other payroll taxes from your employees’ paychecks and send it to the government with the portion you also have to pay for the people who work for you. You will need to learn about things like employer-sponsored health insurance and retirement accounts. Also, your city or county might tax you every year on all of your equipment and inventory.
Business Structure and Co-Founder Agreements
Working with a lawyer can be invaluable for deciding on the structure for your start-up. Do you want to be a sole proprietorship, partnership, limited liability corporation, S-corporation, standard corporation, or some other form of entity? An attorney can explain the differences between these structures and provide guidance on your best options.
A lawyer can draft the documents that you might need to file with the state, like your company’s articles of incorporation, bylaws, and fictitious name registration. Your attorney can also review and negotiate contracts for you, like your commercial office space lease, supply contracts, and employment agreement with your new hires.
About half of all new businesses fail within the first few years. You will want to plan on and prepare for the worst-case scenario. It's useful to walk through a “what if” assessment to make sure that you will be able to survive if things like these happen:
Your business partner dies, and his or her spouse tries to take the deceased partner’s place in the company.
You or your business partner becomes permanently disabled.
New legislation makes your line of business illegal – think about how you would pivot to stay in business with a legal product or service.
The bank pulls your line of credit or another type of financial backing.
Your contract with your co-founders can include strategies to address these and other situations. When you work with a Columbia, Maryland start-up attorney from the beginning, you can avoid many problems and focus on building a strong, successful company.