1. YOU (AT LEAST MOST OF YOU) ARE NOT LAWYERS
Most start-ups begin as sole proprietorships (a single individual with an idea for a product) or as a group of individuals working cooperatively to develop, produce and market a product or an idea.
At some point, and the sooner the better, you need to decide on just what kind of legal entity you should be.
This is an important decision because not only are there tax consequences involved, along with possible state and federal laws and regulations affecting your embryonic business, but in the scenario of multiple people involved, you should early on determine the relationship between you—and this involves not only who and how business decisions are made but also the relative contributions to the business by the individuals involved and profit and loss sharing.
Sure, you can look up the forms to file online, and try to do it yourself, but if you mess it up, it’ll cost you more than if you let a lawyer handle and do it right the first time.
2. YOUR BUSINESS IS A LEGAL ENTITY WHETHER YOU KNOW IT OR NOT
Sole proprietorships, LLCs, Partnerships and Corporations are all governed under state laws in the state where they exist.
Those laws can differ significantly from state to state and in the case of LLCs, partnerships and corporations, registration with the state is mandatory and periodic filing with the respective Secretaries of State are required.
This is in addition to the payment of state and local sales taxes imposed on tangible products.
Failure to comply with state formulation of a business entity and filing of required reports can result in administrative dissolution of your business and fines or penalties.
3. PUT IT IN WRITING OR BE STUPID AND WIND UP IN COURT
Trying to save a little money by refusing to hire an attorney to handle the legal affairs of your business can cost you big time later on. Legal disputes can erupt from disagreements between the partners, members of an LLC, or stockholders in a corporation.
It is better to hammer out all the important aspects of the internal workings of your business from the beginning than to get hammered in court later on.
In addition, written agreements with independent contractors, vendors, and others you deal with are just as important and can likewise find you in court if not taken care of early and prudently.
4. SO YOU WANT TO BE A COPYRIGHT OR TRADEMARK LAWYER – OR PATENT LAWYER – WITHOUT GETTING YOUR LAW DEGREE! HaHahaahhahahh …….!
Well, you can try. Get on the internet and get started and see if you, untrained in the law and its legalisms and legalese can be sure that what you’re doing is legal and you won’t get sued.
But just expect that when you get that “cease and desist” letter with its threat to immediately take you (maybe individually) or your business to court, you’ll go running to a lawyer to try to get you out of that mess, and it’ll cost significantly more then.
5. SO YOU GOT SUED BUT YOU’LL REPRESENT YOURSELF/YOUR BUSINESS
Even lawyers are not dumb enough to represent themselves in serious litigation. If you have comprehensive liability insurance coverage, your insurance company is obligated to provide you, and pay for your lawyer.
But remember, the lawyer the insurance company hires, while he has fiduciary duties to you and your company, really works for the insurance company, not you.
Sometimes there’s a conflict of interest and you should be advised to get your own lawyer. Better to have one you know and have trust in to represent you than to have to look one up in the yellow pages or online.
6. OK, YOU GOT YOUR BUSINESS GOING AND NOW YOU’RE HIRING EMPLOYEES—PREPARE FOR COURT!!!!
If your business is successful enough to begin hiring employees, and you do so, you face an avalanche of state and federal governmental regulation.
Everything from immigration, to minimum wage and overtime laws to discrimination (watch out for that sexual harassment suit!) to workers’ compensation laws. And that company policy manual might just be used against you in court one day.
7. I’M A SMART GUY/GAL, I DON’T NEED A LAWYER
Wrong, wrong, wrong. I’ve had people whose IQs barely approach 100 tell me “I was thinking of going to law school,” or “I was going to law school, but…”
They seem not to know it takes an undergrad degree and at least 3 years of intensive study to get a law degree, much less the experience gained over years of practice to actually be able to handle a legal situation or draft a contract or be sure the company complies with all applicable laws.
Unless you’re prepared to spend hundreds of hours studying every possible aspect of the law that may apply to you or your company, you definitely need a lawyer.