Small business owners spend most of their days focused on the nitty-gritty, like marketing their businesses, managing employees and serving customers. One area that tends to take a backseat: legal concerns.
But failing to take the proper steps for legal protection can put the business you’ve worked so hard on at risk.
So, when does a small business need a lawyer?
When startups need lawyers
Form of business
There are many legal self-help resources available to help you form a corporation, partnership or LLC and handle all the legal paperwork. (Rocket Lawyer, LegalZoom and Nolo are three popular resources to check out.) For most startups, choosing a business structure and forming company can be handled this way. However, if you’re not sure what form of business is best for your startup goals, or if you’re starting a business that is complex, such as having multiple investors or partners, it’s worth consulting with an attorney as well as an accountant. They can help you explore the pros and cons of different forms of business and make the right decision.
Patents and trademarks
Every business should trademark its logo and other identifying brand marks. There’s plenty of self-help information available at the U.S. Patent and Trade Office website; generally, you can handle trademark filing on your own. Patents are more complex, however, and making a mistake in this area can be costly. An attorney specializing in patent law can be invaluable in getting through the patent process.
Unfortunately, no matter how well you think you know someone, you need a contract to protect yourself and your business. Make sure your contract is clearly written, outlines the scope of work and payment, and covers all the possibilities that could go wrong. You can use online templates to draft contracts for the basic business situations you’re likely to encounter; however, having an attorney review and fine-tune them to make sure they’re complete is worth the money. You should also have an attorney review any contract a client asks you to sign.
When existing businesses need lawyers
At some point, every small business will experience the pain of not getting paid. If you need to escalate the situation and take the client to court, an attorney can either represent you or offer advice.
Self-help legal resources can help you create an employee handbook on your own, but you should always have a lawyer review it to make sure your employee policies comply with state and federal laws. Check out SCORE’s HR resources, resources for writing an employee handbook and their Ultimate Guide to Creating an Employee Handbook.
It’s also wise to consult a lawyer if you’re considering terminating an employee. To avoid putting your business at risk of a lawsuit—an issue that 30% of small businesses worry about—the lawyer can advise you if you need to take additional steps or gather more documentation before letting the person go.
If you’re hit by a lawsuit yourself—which can happen to even the smallest businesses—you’ll need a lawyer on your side. Having a relationship with a lawyer before you need one can ensure you have someone to turn to in an emergency.
Protect your small business
The law intimidates many small business owners, but it doesn’t have to. The key is to educate yourself as much as you can. Use self-help legal sites such as those mentioned above to get a basic understanding of legal issues. They have resources, articles, templates, legal forms and other tools you can use to tackle simple legal matters on your own.
The key to staying out of legal trouble is to think ahead at every stage of your business. From naming your company and designing a logo to negotiating a lease for your new business and hiring your first employee, running a business involves many potential legal traps that can trip up the uninformed. Knowledge is power, so know what your legal rights and responsibilities are at each stage of business development.
Working with a trusted business advisor such as your SCORE mentor can alert you about what to expect and what steps you must take to protect yourself, your business and your assets. Get matched with a SCORE mentor today.
Copyright © 2023 SCORE Association, SCORE.org
Funded, in part, through a Cooperative Agreement with the U.S. Small Business Administration. All opinions, and/or recommendations expressed herein are those of the author(s) and do not necessarily reflect the views of the SBA.