Running a business is undoubtedly costly. As a business owner, you have to worry about your lease, equipment, inventory, employees, and your own personal well-being, among other things. Adding the costs of a lawyer may not be at the top of your list. But why would it be? You’re only expecting things to run perfectly with no problems, right? And they might … until they don’t.
Here are some situations when seeking legal advice early can actually save your business money.
Your Business Partner Wants Out
You started a business with your best friend or your brother-in-law, and you had a solid idea. You two have known each other for what seems like forever and running this business with your partner is going to be great. And then something happens. One of you gets a little too comfortable with the way things are going and the other wants more. Maybe the two of you see the business going in two different directions. Either way, you’re no longer on the same page. What now?
Getting advice from a lawyer in the business planning stages – choosing the type of company, partnership agreements, operating agreements, and buy-sell agreements – will have most likely saved you and your soon-to-be former partner a lot of time and money because procedures and precautions would already be set in place for you. You would only need a small amount of legal advice early, rather than having to go to war against your partner later on.
Contracts? What Contracts?
You had this great idea to throw a block party with other small businesses from the community. You offered to create and post flyers around town and supply the catering because you have a couple friends of friends that are willing to help you out with the costs. After talking with those friends of friends, you’ve shaken hands and smiled big because you made a great deal. But when it’s time to pick up the flyers, you see that they are the size of business cards, not index cards. And when the caterer comes to the party with food for 50, instead of food for 200, you’re in complete shock. No problem, just refer back to the business contract. Oh, wait. You didn’t write one up because you were dealing with a friend of a friend.
Any lawyer would tell you to ALWAYS HAVE A CONTRACT. It doesn’t matter who you are dealing with. People make honest mistakes. They forget things. And other times, people are just manipulative and deceitful. Having a legal document to back up a handshake will come in handy when you’ve just shelled out $5,000 for food for 50.
You Didn’t Keep Up with Regulations
Keeping up with the Kardashians is easier than keeping up with changes in regulations. And now, your license is no longer valid because you didn’t know the renewal policy changed from every five years to every two. Reinstating means retesting and repaying everything all over again. The IRS also made changes to business tax regulations without your knowledge and approval and you owe back taxes on things you would never even think would warrant taxing.
As a business owner, you have a million and one things running through your mind every day. Leave the rules and regulations to someone who devotes their days to knowing what’s going on.
There are many good lawyers out there that genuinely want to help by providing great legal advice. If your main issue with working with a lawyer is about trust, you can always find one through friends and colleagues. Talk with people you respect and get their input on a specific firm or attorney. You don’t want to wait until your small business has a problem to look around for a lawyer, because you might not be able to find what you want or need in the time you have.