When a new venture is in its infancy, it generally doesn’t have the resources to hire in-house professional help such as an attorney or accountant. Instead, it must rely on building relationships with professionals on an “as needed” basis. These professionals provide information and services not normally within the scope of expertise of most entrepreneurs, and they can play devil’s advocate for the entrepreneur, pointing out potential flaws in the business concept. They provide the new venture – and the entrepreneurial team in love with its own concept – a reality checks that is invaluable. There are a number of these professional advisers that entrepreneurs rely on at various times in their venture life.
Part 1: Attorneys
There is hardly any aspect of starting a new venture that is not touched by the law. Unfortunately, entrepreneurs who have never had any education in the legal aspects of business often don’t recognize that they need legal help until their business gets into trouble.
Attorneys are professionals who typically specialize in one area of the law (such as taxes, real estate, business, intellectual property) and can provide a wealth of support for the new venture. Within their particular area of expertise, attorneys can:
- Advise the entrepreneur in selecting the correct organizational structure: sole proprietorship, partnership, LLC, or corporation.
- Advise about and prepare documents for acquisition of intellectual property rights and for licensing agreements.
- Negotiate and prepare contracts for the entrepreneur, who may be buying, selling, contracting, or leasing.
- Advise the entrepreneur on compliance with regulations related to financing and credit.
- Keep the entrepreneur apprised of the latest tax reform legislation and help to minimize the venture’s tax burden.
- Assist the entrepreneur in complying with federal, state, or local laws.
- Represent the entrepreneur in any legal actions as advocates.
Choosing a good attorney is a time-consuming but vital task that should be accomplished prior to start-up. Decisions about such things as the legal form of the business or contracts or contracts made at inception may affect the venture for years to come – hence the need for good legal advice. To find the best attorney for the situation, entrepreneurs should:
- Ask accountants, bankers, and other business people to recommend attorneys who are familiar with the challenges facing start-ups, particularly those in the entrepreneur’s industry.
- Look for an attorney who is willing to listen, has time, and will be flexible about fees while the business is in the start-up phase.
- Check out the firm by phone first. One can learn a lot about a law firm by noting who answers his or her office phone directly; this may be a very small firm with limited resources. Does the person answer the phone sound genuinely interested in being helpful?
- Confirm that the attorney carries malpractice insurance.