Reasons Someone Needs a Small Business Attorney
Small businesses remain an integral part of the United States’ economy. In fact, approximately 44% of US economic activity involves the small business sector. In Michigan, any business with 500 or fewer employees is categorized as a small business.
The Great Lakes State boasts a record number of start-up ventures. Actually, 99.6% of Michigan businesses fall into the small business category. Whether a small business succeeds depends on various factors. For this reason, business owners should hire an experienced business law attorney to navigate the legalities of establishing a business, running a business, handling legal matters that arise along the way, and selling or closing a business.
Many people make a grave mistake assuming they can establish a business on their own. Unfortunately, this error in judgment often leads to legal trouble down the road. An experienced business law attorney guides you through the necessary steps during the business formation stage. The first step is forming a legal entity. Hoeg Law will explore the various options with you and decide which structure works best for your business. Options include:
- C-Corps – These are traditional corporations classified as individual tax entities. This is the preferred structure if your company will be pursuing venture capital funding.
- S-Corps – This is similar to C-Corps, except there are limits on investors and stock options.
- LLCs – This is the most flexible structure for start-ups. These are taxed as pass-through entities and have less compliance requirements.
- Limited Partnerships – These entities are formed under state law. They are commonly used in real estate.
Also, an attorney may help you properly register your business with the state and obtain the business EIN number for tax purposes. So, a business law attorney makes sure your company remains compliant with state law.
Running a Business
Once a business is operational, legal services will be required regarding interactions with employees and clients/customers. In regards to employees, customers, or clients the following legal agreements may be necessary to protect your business from future litigation.
- Employee Offer Letter
- Employee Contract
- NDA – A non-disclosure agreement protects any proprietary information from leaving your business.
- Intellectual Property Licenses (IPL) – Should you trademark your business logo, or property?
- Customer/Client Contracts – These legally binding agreements must be drafted by an attorney.
- Liability – Having the proper business structure and legal contracts in place protects business owners from liability suits. Basically, prevention is the wisest move you can make when starting a new business.
Closing, Selling, or Renaming a Business
At some point, a business owner may decide to retire, or start a new business. A sole proprietor may make this decision on their own. However, any other type of partnership requires all owners, or a majority to agree. A business law attorney will look at the company’s legal documents and assist business owners regarding this process. If you are closing down your business these are some steps that must be followed.
- File a final tax return
- Pay employees
- Pay all bills
- Close business account after all checks have cleared
- Cancel EIN number and cancel IRS business account
- Keep ALL records
If you decide to sell your business, this requires a business law attorney who specializes in mergers and acquisitions.
All terms of former contracts must be followed. Now, new contracts will be drawn up. This is a complex, legal procedure. Final dissolution paperwork, business licenses, registrations, permits, business name, and a variety of legal matters MUST be settled. In other words, contact an experienced business law attorney for guidance.
In short, when you decide to sell your company or its assets in part or in whole, it’s good to involve a small business attorney. The same is true for when you want to acquire another company or its assets. To make sure you navigate the process successfully.
Other Reasons You May Need a Small Business Attorney
When Complaints Are Filed Against You
Your company may receive complaints from federal, state, or even local government entities. They may do so when they launch an investigation of your company due to violating certain laws. Regardless of whether the charges leveled against you are severe or not, it’s good to get help. To make sure you don’t take actions that will work against you, you should talk to a small business attorney the moment you become aware of the issue.
Some parts of running a business are easy enough to do on your own. For more technical issues like the four outlined above, you’re better off involving a qualified small business attorney. An estimate was made by a recent USSBA report placing the share held by small businesses at 44%. Small businesses clearly account for a good part of America’s economy as well as a large number of potential corporate business clients. It’s therefore easy to get good representation as a small business owner if you need it.
When You Get Sued
In the daily running of a business, clients or employees may sue you for one reason or another. These reasons range from discrimination, a hostile environment, or even injuries suffered while on your premises. When something like this happens, it’s important to approach a small business attorney to guide you on how to proceed so you can protect your assets and reputation, and suffer minimal loss.
For Environmental Issues
This mostly applies to businesses with a physical location, but depending on the specific circumstances, even those without may be implicated. If something concerning the environment happens and your company is involved, it’s good to let your small business attorney know. Even if your business did not directly cause the issue, you may still be penalized, so seek assistance in this case.