Perhaps the most challenging part of starting a small business is covering all your legal bases. "The law increasingly affects every aspect of small-business operation, from relationships with landlords, customers and suppliers to dealings with government agencies over taxes, licenses and zoning," says Fred S. Steingold, an Ann Arbor, Michigan, attorney and the author of Legal Guide for Starting & Running a Small Business.
When do you need a lawyer? Although the answer depends on your business and your particular circumstances, it's generally worthwhile to consult an attorney before making any decision that could have legal ramifications. These include setting up a partnership or corporation, checking for compliance with regulations, negotiating loans, obtaining trademarks or patents, preparing buy-sell agreements, assisting with tax planning, drawing up pension plans, reviewing business forms, negotiating and drawing up documents to buy and sell real estate, reviewing employee contracts, exporting or selling products in other states, and collecting bad debts.
If something goes wrong, you may need an attorney to stand up for your trademark rights, go to court on an employee dispute or defend you in a product liability lawsuit. Some entrepreneurs wait until something goes wrong to consult an attorney, but in today's litigious society, that isn't the smartest idea. "Almost every business, whatever its size, requires a lawyer's advice," says James Blythe Hodge of the law firm Sheppard, Mullin, Richter & Hampton. "Even the smallest business has tax concerns that need to be addressed as early as the planning stages."
In a crisis situation--such as a lawsuit or trademark wrangle--you may not have time to thoroughly research different legal options. More likely, you'll end up flipping through the Yellow Pages in haste . . . and getting stuck with a second-rate lawyer. Better to start off on the right foot from the beginning by choosing a good lawyer now. Many entrepreneurs say their relationship with a lawyer is like a marriage--it takes time to develop. That's why it's important to lay the groundwork for a good partnership early.