Setting Up Your Business Structure: Hire Someone
It’s smart to hire a licensed professional to help you evaluate which form of business organization is right for your new venture. They will review your tax situation and help you synchronize your short-term and long-term business objectives in a way that lets you maximize the benefit of business ownership. They can also ensure that your business will be in compliance with the necessary legal requirements at each stage of the startup process.
Even if you prefer to handle as much of the paperwork yourself as possible (see Do It Yourself), spending an hour with a lawyer is a wise investment. They can explain the process and together you can decide what steps you're most confident in handling yourself. If nothing else, it's a good reality check.
The “right lawyer” is someone you can speak to comfortably, someone who specializes in business law and has experience with business start-ups. They are also someone who is licensed to practice law in the jurisdiction where you wish to start your business.
A lawyer is a state licensed professional who is required to meet specific requirements before being granted the privilege to practice law. As a result, a lawyer from one state is not automatically allowed to practice in another. If you don’t already have recommendations for a local business lawyer from friends, family, or colleagues; you can always contact your state or local bar association for a referral.
There are lots of good lawyers to choose from. One common mistake people make is to assume any lawyer can handle any legal matter. That’s a dangerous assumption because lawyers specialize in specific areas of the law. It will save you time and money to work with someone who has done lots of business startups instead of a lawyer who last set eyes on the subject in law school.
Once you’ve identified a few good candidates, go interview them. But before you do, let them know you’re interviewing multiple lawyers and find out if an initial consultation is free, because if they’re under the impression that an attorney-client relationship has been established and start giving you legal advice you might find yourself on the receiving end of an invoice. Avoid that predictable surprise by managing expectations well before you get down to business. Remember, your purpose is to determine whether there is good fit between you and the lawyer on a business and professional level, not get free legal advice. Be fair.
Once you have the consultation issue squared away, you need to determine whether the lawyer you’re interviewing is a good listener. Are they interested in what you have to say? Do they understand your business? Can they help you and can they explain their services in plain English, without being intimidating? What’s your comfort level? Ask for client recommendations then call those people and ask about their experience with the lawyer. Does the lawyer return phone calls promptly?
Even though the startup process is usually a one-time transaction, keep in mind that you may want to call on a lawyer for other business needs. You may, for example, need an office, warehouse, or retail lease reviewed. Similarly, you may need help setting up your standard terms and conditions of sale, or purchase, or perhaps a confidentiality agreement. The only way you can judge chemistry and determine whether there’s potential for a long-term business relationship is to meet the lawyer in person.
While you’re there, you’ll also want to discuss their billing arrangements and billing rates. Some matters will be billed on a time and material basis, others as a flat fee. Find out who else will be working on your project and who you’ll be able to talk to when you have a question.
Finding the right lawyer may take some time and effort; but it’s a worthwhile investment. Having someone you trust and can call on to discuss the legal aspects of your growing business is a valuable asset.
