Questions to ask a business lawyer

If you are considering starting a business, it is crucial to have a comprehensive understanding of the legal elements at play.

In this article, we will delve into 15 essential questions that you should pose to a business lawyer to guarantee that you are positioning yourself for success.

From selecting the appropriate business structure to safeguarding your intellectual property and strategizing for the long-term, these inquiries will assist you in navigating the legal intricacies of establishing and managing a business effectively. Let’s commence!

Questions to Ask a Business Lawyer Before Starting a Business

When embarking on the journey of starting your own business, it is essential for you to consult with a legal expert to navigate the complex landscape of laws and regulations. Jane Haskins, Esq. from Rocket Lawyer advises small business owners like yourself to ask essential questions to mitigate risks and ensure smooth operations.

1. What Business Structure Should I Choose?

When choosing the right business structure, it is important to consider how it impacts your legal liability, tax responsibilities, and overall management. Jane Haskins, Esq. recommends evaluating options such as sole proprietorship, partnership, LLC, or corporation.

Each business structure has its own set of advantages and disadvantages. For instance, a sole proprietorship offers simplicity in management and tax obligations but also exposes the owner to unlimited personal liability. Partnerships allow for shared decision-making and resources, but they also carry the risk of disagreements and shared liabilities. Limited liability companies (LLCs) combine the benefits of both sole proprietorship and corporations by shielding owners from personal liability while providing flexibility in tax treatment. Corporations offer strong liability protection but involve more formalities and potentially higher taxes. It is advisable to seek legal consultation to determine the best fit for your specific needs and circumstances.

2. Why is it Important to Keep Business Records?

Maintaining accurate and comprehensive business records is crucial for compliance with legal and tax regulations, as well as for making informed business decisions. The importance of meticulous record-keeping is emphasized by Andrew Priobrazhenskyi.

Having detailed records helps businesses not only in meeting their legal obligations but also in analyzing their financial performance, identifying areas for improvement, and planning for the future. Various types of records should be kept, including financial statements, tax filings, contracts, invoices, and employee records. Technology plays a crucial role in modern record-keeping, offering tools like cloud storage, digital filing systems, and software applications that automate data entry and analysis.

3. What are My Risks of Getting Sued as a Small Business Owner?

As a small business owner, understanding the risks of potential lawsuits is critical to protecting your business. You must be cognizant of common risks such as employee disputes, customer complaints, and contractual issues, as highlighted by Tim Allen.

Moreover, lawsuits can also stem from intellectual property infringement, product liability claims, or cybersecurity breaches. Implementing legal protections, such as robust contracts, clear employment policies, and proper business entity structuring, is critical in safeguarding your business against these risks.

Maintaining transparent communication with employees and customers, conducting regular compliance checks, and seeking legal advice when required can help minimize the likelihood of facing costly lawsuits. By proactively addressing potential legal vulnerabilities, small business owners like yourself can better protect their interests and ensure the long-term success of their ventures.

4. What Happens if I Get Sued?

If your business is confronted with a lawsuit, it is crucial to promptly seek guidance from a seasoned attorney, such as those at Oberheiden P.C., to comprehend the legal procedures and devise a strategic plan.

Following your consultation with legal counsel, the subsequent course of action involves a meticulous examination of the accusations outlined in the lawsuit and the compilation of all pertinent documents and evidence. Your attorney will collaborate with you to construct a defense strategy and address the allegations promptly.

Throughout the legal proceedings, your legal team will advocate for your interests in court appearances, negotiations, and potential resolution discussions. Maintaining transparent communication with your attorney is essential to remain abreast of case developments and explore all potential scenarios, including settlement offers and court rulings.

5. Can I Use Personal Assets in Running My Business?

Utilizing personal assets to fund or support your business may provide immediate financial relief, but it also carries substantial legal and financial risks. These risks include personal liability for business debts and legal judgments.

It is essential to maintain a clear distinction between personal and business finances in order to safeguard your assets. Mixing personal and business funds could lead to the piercing of the corporate veil, resulting in the exposure of personal assets in the event of business-related legal actions or debts. Seeking legal counsel regarding the structuring of your business entities can offer insights into the consequences of mingling assets and how to protect yourself legally. By ensuring a separation between personal and business finances, you can mitigate potential risks and secure the long-term financial health of both your business and personal assets.

6. How Do I Minimize Risks as an Employer?

Minimizing risks as an employer involves adhering to employment laws and regulations, implementing clear policies, and fostering a positive workplace culture to prevent issues such as discrimination claims and workplace disputes.

Plus these foundational steps, you should establish strong strategies for legal compliance, conduct regular employee training sessions on policies and procedures, and maintain thorough documentation to reduce potential liabilities. Ensuring that all staff members are well-versed in applicable laws and company policies can help prevent misunderstandings and conflicts that may lead to costly legal battles.

Maintaining detailed records of employee performance, disciplinary actions, and compliance efforts can serve as crucial evidence in the case of disputes or legal challenges, providing protection and support for your position as an employer.

7. What Should Be in My Operating Agreement or Bylaws?

In your business, it is crucial to have an operating agreement or bylaws that clearly define the management structure, decision-making processes, and conflict resolution mechanisms. These documents are essential for ensuring smooth operations and legal clarity within your organization.

The operating agreement or bylaws serve as foundational pillars that guide the daily operations and major decision-making processes of the company. They outline the roles and responsibilities of key individuals, such as managers and officers, while also specifying their levels of authority and limitations. Additionally, these documents establish procedures for resolving disputes, thereby preventing potential conflicts that could disrupt business activities.

By incorporating provisions for decision-making processes, the operating agreement or bylaws help streamline operations, promote accountability, and ensure compliance with legal requirements. Ultimately, these documents enhance internal cohesion and strengthen external relationships with stakeholders.

8. What Should I Consider Before Taking on Investors?

Before you decide to bring on investors, it is important to carefully consider the impact it will have on your business control, financial obligations, and growth strategies. Tiffany Hafler recommends evaluating how well the investors align with your business vision and goals.

This evaluation process is critical because investors can offer substantial financial resources and expertise that can help scale your business. However, it is crucial to assess the potential loss of autonomy and decision-making authority that may come with sharing ownership.

Legal agreements, like shareholder agreements or voting rights restrictions, are typically necessary to protect the interests of both parties and establish clear expectations. While investments can provide valuable capital and speed up growth, they can also result in conflicts over strategic direction if the investors have differing views on business objectives.

9. How Can I Protect My Intellectual Property?

Protecting your intellectual property, including trademarks, patents, and copyrights, is imperative for sustaining your business’s competitive advantage. According to Cody Candee of Bounce, it is crucial to prioritize legal protections to ensure the safety of these assets.

Ensuring the proper intellectual property protection is in place serves as a preventative measure against unauthorized use of your innovative concepts and creations. Trademarks safeguard your brand identity, logos, and slogans, while patents shield your inventions and processes. Copyrights, on the other hand, provide protection for your artistic works, such as books, music, and software.

By proactively securing these intellectual property rights, a solid groundwork is established for your business, ultimately enhancing its value in the market. While the legal processes for obtaining and enforcing these protections may vary, the advantages that come with it far outweigh the associated costs.

10. What Contracts Does My Business Need?

Ensuring that you have well-crafted contracts is essential for protecting your business interests and preventing disputes. According to Kenny Kline from BarBend, it is advisable to consult with an attorney to guarantee that all agreements are legally binding and comprehensive.

These agreements, which include employment contracts, vendor agreements, and partnership deals, serve as crucial foundations for maintaining the smooth operation of your business. Employment contracts delineate the terms of employment, safeguarding the rights and expectations of both parties. Vendor contracts establish the terms of services or goods provided, promoting clarity and accountability. Partnership agreements define the responsibilities and rights of each partner, establishing the framework for a successful business relationship.

By undergoing a thorough legal review and customization of these contracts, you can mitigate risks, enhance transparency, and establish clear guidelines for all parties involved.

11. What Qualities Make a Company Good to Work For?

A company that values employee well-being, offers growth opportunities, and maintains transparent communication is typically considered a great place to work, as highlighted by Max Whiteside of Breaking Muscle. When prioritizing overall wellness and professional development, organizations often attract employees. Providing competitive benefits packages, such as health insurance, flexible work hours, and ample vacation time, can have a significant impact on employee satisfaction and retention rates.

For instance, Google is renowned for its comprehensive employee benefits, which include on-site wellness centers, free meals, and generous parental leave policies. A positive company culture that encourages collaboration, diversity, and inclusion can foster a sense of belonging and purpose among employees. It is important to provide continuous learning and growth opportunities to keep employees engaged and motivated in their roles.

12. How Can I Protect the Name of My Business?

Protect your business’s reputation by securing trademarks to legally establish your brand identity and prevent potential confusion with similar names.

Once you have selected a unique and recognizable name for your business, trademark registration requires a comprehensive search to confirm its originality. This search is crucial in ensuring the availability of your chosen name for registration purposes. Following the search, the subsequent step is to submit a trademark application to the appropriate regulatory bodies, where you provide essential information about your business and the trademark you intend to safeguard. Upon successful registration of your trademark, you obtain exclusive rights to utilize that name in association with your goods or services, offering legal defense against any infringement.

13. What Happens if My Business Grows Rapidly or Tanks Suddenly?

When your business experiences swift growth or abrupt decline, you face significant challenges and risks that require careful management through legal and financial strategies.

During periods of rapid expansion, it is essential to align legal and operational preparations with the growth trajectory. This includes assessing contracts, compliance obligations, and intellectual property protection to sustainably support the increased scale. Developing a comprehensive contingency plan for potential downturns is crucial for risk mitigation and ensuring business continuity. Flexibility in business operations and a proactive approach to risk management are pivotal in successfully navigating unforeseen challenges that may arise during rapid scaling phases.

14. How Do I Ensure My Business is Compliant?

Ensuring your business’s compliance involves adhering to industry regulations, maintaining accurate records, and regularly reviewing legal requirements to avoid costly penalties and ensure smooth operations. This can be achieved through several key steps:

1. Conduct routine audits within your organization to evaluate current compliance levels and identify any areas for improvement.
2. Stay updated with regulatory changes to ensure that your business remains in alignment with the latest laws and guidelines.
3. Seek legal advice when necessary to help in managing ongoing compliance costs and addressing any complex legal issues that may arise during the compliance process.

15. How Do I Plan Ahead for My Family?

Planning ahead for your family’s future involves integrating your business into your overall estate planning strategy to ensure legal protections and financial security for your loved ones.

One of the key legal tools available for effective estate planning is a trust. You can establish a trust to set aside assets for your beneficiaries while specifying the terms and conditions under which they will receive them. This allows you to bypass the probate process, ensuring a smoother and more private transfer of assets to your heirs.

A will is another essential document that outlines how your assets should be distributed upon your passing, providing clarity and guidance for your family. Aligning your business interests within these legal structures can help safeguard your wealth and ensure your family’s long-term security and well-being.

Frequently Asked Questions

What should I ask a business lawyer before hiring them?

Before hiring a business lawyer, it is important to ask about their experience and expertise in handling cases similar to yours. You should also inquire about their fees and billing structure, their availability for communication, and any potential conflicts of interest.

What type of legal structure is best for my business?

A business lawyer can help you determine the best legal structure for your business based on your goals, finances, and risk tolerance. They can explain the differences between sole proprietorship, LLC, corporation, and partnership, and help you choose the one that aligns with your needs.

What are the laws and regulations that my business needs to comply with?

A business lawyer can provide you with a comprehensive understanding of the laws and regulations that apply to your business. This includes federal and state laws, industry-specific regulations, and local ordinances. They can also advise you on how to stay in compliance and avoid potential legal issues.

How can a business lawyer help with contract review and negotiation?

A business lawyer can review and negotiate contracts on your behalf to ensure that your rights and interests are protected. They can also draft customized contracts for your business and advise you on any potential risks or legal implications before signing.

What should I do if my business is facing a lawsuit?

If your business is facing a lawsuit, it is important to consult with a business lawyer immediately. They can assess the strengths and weaknesses of the case, provide you with legal representation, and help you navigate the complex legal process to protect your business’s interests.

What are the benefits of having a business lawyer on retainer?

Having a business lawyer on retainer means having them available for ongoing legal advice and support. This can save you time and money in the long run by preventing legal issues and providing proactive solutions. It also ensures that you have a trusted legal advisor who is familiar with your business and can assist with any legal matters that may arise.