What Does a Business Lawyer Do?
When starting a new business, you may wonder, “Do I really need to hire a business lawyer?” The answer should almost always be, yes. And here is why.
While it is true that creating an entity on the Secretary of State’s website seems pretty simple, there is much more to starting a business than just registering your entity with the State.
A business lawyer will help to ensure you:
Select the most appropriate business entity,
Know about potential legal issues that may arise,
Avoid trademark infringement, and
Are set up to make your new business run smoothly.
Once your business is formed, a business lawyer will help you draft necessary contracts and advise you on corporate law and internal governance such as:
Hiring and firing of employees,
Independent contractor agreements,
Resolutions and minutes,
Conducting meetings,
Regulatory compliance,
Liability waivers, and
Drafting and negotiating service and vendor agreements.
A good business lawyer is essential to your business, not only as you start your business but also as you grow your business and new challenges continue to arise.
Business Lawyers Are Central to Your Team
Once you have a business plan together or have decided to take the plunge on starting your business, you will need to build out your team of experts, which should include:
A business attorney,
An accountant,
A insurance agent,
A trusts & estates attorney,
A banker, and
A financial advisor.
Depending on your business and the products or services you plan to offer, whether you will require a brick and mortar location or online platform, you may require other experts as well. A good business lawyer should have a network of these experts and will offer you assistance setting up your team of experts, depending on your needs.
Business Lawyers Check if Your Business Name is Available
Prior to filing anything with the State, your business attorney will check that your proposed business name is not only available with the State but that it is not in use by another entity that already exists. This is an important step to avoid any trademark infringement issues from the start.
Business Lawyers Select the Right Business Entity
Choosing the correct business entity is important to help protect your personal assets and ensure you are able to carry out the business the way you have intended. I regularly talk to individuals who registered as a sole proprietorship with the Secretary of State. When I ask if their intent was to shield their personal assets, they always say yes. I inform them their personal assets are not protected, and they are actually personally liable for all the business’ debts, obligations, and liabilities.
There are other considerations to selecting the most appropriate business entity for your business. A business attorney will work through some of the most important considerations to help determine what the best entity will be for your business.
Factors to determine the right business entity will include:
Number of owners,
Tax considerations,
Ownership structure,
Jurisdiction of formation and jurisdiction where the entity engages in business,
Nature of your business,
Number of investors you’ll need, and
Number of employees you plan to have.
Based on the answers, your business attorney will choose the best business entity to protect your personal assets from the debts, obligations and liabilities of your newly formed business and the most appropriate structure from a taxation and management perspective.
Business Lawyers Will Register Your Business Entity
Once you’ve signed off on your business entity, your business attorney will register your entity with the State.
Typically, they will need to know answers to the the following questions before registering your entity:
Who will act as your registered agent? Do they have a physical address located in the State?
Do you have the provisions of your Articles of Incorporation and Organization; do you need to include a limitation of liability, the ability to vote by proxy, etc.?
Will you be manager-managed or member-managed if you select a limited liability company as your entity?
Will you have a physical address?
Who will be the members or managers if you are forming a limited liability company?
Business Lawyers Will Draft Your Business Formation Documents
Next, your business attorney will draft your formation documents to ensure you’re fulfilling the legal requirements of your particular entity. Business formation documents are statutorily required in some cases and highly recommended in other cases. Additionally, if you are seeking any sort of financing, you are typically asked for your formation documents.
Formation documents are extremely important to your business and are not something you want to just purchase off the internet. They must be tailored to your business.For a corporation, this includes your articles of incorporation, bylaws and potentially a shareholder agreement. For a limited liability company, this includes your articles of organization and an operating agreement.
You, many times with the help of your business lawyer, will also consult with your team of business experts to:
Obtain insurance,
Apply for any financing you may need,
Establish a separate bank account for your entity,
Obtain an Employer Identification Number with the IRS, and
Potentially find a brick-and-mortar location (if you are purchasing real estate, you may want to consider doing so with a separate entity).
A business attorney will ensure you are following corporate formalities, which will help you avoid piercing the corporate veil.
A Business Attorney Will Draft Employment Contracts and Other Necessary Contracts
You have successfully formed your entity and set up your business—congratulations! You and your business attorney will discuss other contracts and legal protections you may want to consider, including:
Offer letters or agreements for employees,
Independent contractor agreements,
Commercial leases,
Creating a website, which may need to include terms and conditions, privacy policies, and disclaimers,
Liability waivers,
Service or vendor agreements, and/or
Drafting a succession plan.
While you may not need all these agreements at the start, once you have an established relationship with your business attorney, it will make the process of drafting these agreements more efficient and cheaper. Your business attorney will already have an understanding of your business and can help advise you on potential legal issues and compliance concerns you may not even be aware of. Having an established relationship with a business lawyer actually saves you money and time in the long run.
Business Attorneys Help You Comply with Employment Laws
As you get busier, your business attorney will draft important hiring documents like:
Employment offer letters, and
Employee handbooks
Handbooks are especially important in a state like Montana, which is not an employment at-will state. A business attorney can advise you on the nuisances of employment laws, which vary significantly from state to state. In the past couple years, there have been significant employment law changes in various states, so it is extremely important to check in with your business attorney at least yearly to make sure you are in compliance with the laws and regulations in your state.
Business Lawyers Help Your Business Grow
After a few years into your successful business venture, your business attorney can help set up an advisory board or committee to help your business expand or transition. To do this your business attorney will draft:
An advisory board charter,
Advisory board agreements, and
Equity agreements.
Business Lawyers Advise and Negotiate Mergers and Acquisitions
You may also decide it is time to merge or be acquired. Consult with your business lawyer on the appropriate structure for a buyout or acquisition. You may think a merger is best when it turns out an asset purchase agreement may be more mutually beneficial. Or instead of merging, it would be best to do a joint venture agreement.
Any good business lawyer will be able to advise you on the best structure, help with drafting the required agreements, and handle the negotiations on your behalf.
Business Lawyers Will Help You Dissolve Your Business
When you’re ready to close your business, a business lawyer will help you properly close down your books and dissolve your entity by:
Filing a termination document,
Properly notifying your creditors,
Liquidating your assets, and
Limiting your future liability.
Business Lawyers Protect Your Business From Day One
If you are ready to put your heart and soul into a new business, it makes sense to hire a business attorney to ensure you are legally protecting yourself and your family from your new venture’s potential debts, obligations and liabilities.
Investing in a legal expert upfront will help you avoid potentially expensive and stressful litigation or liabilities down the line. Starting your business on the right foot often proves to be cheaper than trying to clean up your business after years of operating fast and loose.
