There are many old adages that apply to why a small business needs to consult with and use the services of an attorney. My favorite is “You don’t know what you don’t know!” It is your job as an entrepreneur to focus on what you do best, which would be to run your business. It is the job of the attorney to understand and provide proper guidance regarding the legal hurdles and pitfalls that are waiting for small businesses. Four legal hurdles that small businesses are likely to encounter include the need for contracts, which choice of entity to select, real estate and need for an exit strategy.
At various times, every small business will need to have a contract drafted. An attorney will be able to help the business determine the exact language that should be included in the contract. The types of contracts that may need to be drafted include contracts for customers, clients, suppliers and even co-owners.
The second hurdle relates to the structure or choice of entity for the business. Depending on the choice made, there will be different tax consequences for the business and individual owners. An attorney will also be able to provide guidance with regard to which entity selection is the best fit based on what type of investing or funding the company is receiving, among other factors.
A third hurdle standing before most small businesses relates to real estate. Many businesses will sign a lease for commercial space, to house their offices or storefront. These leases tend to be drafted by the landlord and contain language that is beneficial to the landlord and may even be detrimental to the tenant. Commercial leases are negotiable and an attorney will be able to provide the landlord with a tenant’s addendum that contains provisions beneficial to the tenant.
Finally, a small business will need the assistance of an attorney to determine the exit strategy for the business. An exit strategy includes the formulation of a plan of how the owners of the business will exit the business either contingent on a planned or unplanned event. A business needs to know what will happen if one owner becomes disabled, dies or just decides it is time to move on. Will the business continue? What happens to that owner’s share of the business? These questions need answers. An attorney will be able to walk you through this process and ensure that all your concerns have been addressed. Remember “You don’t know, what you don’t know.”