Los Angeles is currently one of the most popular start-up areas in the country. Typically, those who decide to start a new company has a great idea and the necessary money to get started. Unfortunately, many new businesses fail to consider the legal implications of their new venture. Few new business owners consult with a civil attorney in Los Angeles before getting started, and it costs them.
Both state and federal laws that apply to start-ups differ based on the specifics of the situation. All businesses need to investigate options to protect them from personal liability, business debts, and other obligations. Beyond that, getting input from a start-up lawyer can influence decisions built into the foundation of your business. While it might seem like hiring a civil attorney is an extra expense, you can’t really afford to skip it.
How Start-up Attorneys Can Help Your Small Business
When you initially set up your business, you have to make decisions about your company’s structure. Even selling handmade crafts at local festivals requires a business structure. Your structure will dictate the legal responsibilities and potential liability of business owners. Choosing the wrong entity could result in making you personally liable for the mistake of one of your employees or partners.
There are several common business structures that new companies use. These structures can be changed down the road, but making the right choice upfront can save plenty of headaches later on. Each structure has its own advantages and disadvantages. Your small business attorney can help you make the right decisions.
Sole Proprietorships are typically one-person operations. The owners remain personally liable for lawsuits filed against the company, and profits and losses are reported on the owners’ personal tax returns. There is no special paperwork needed to form a sole proprietorship. They essentially exist the moment you start doing business.
Partnerships are similar to sole proprietorships in regards to liability. Partnerships are when two or more people start a business together. While there are no required forms to register, it is often advised to have some sort of contract dictating ownership. Each owner will pay their share of the company’s profits or losses on their personal tax returns.
Corporations come in several sizes.
- A standard corporation, known as a C-Corp, is treated almost like a separate entity. They have independent legal and tax structures distinct from the owners. They have no limit to the number of shareholders they have and are taxed on corporate profits and shareholder dividends.
- An S-Corp has a similar liability structure. There is a limit to the number of shareholders, and owners report their share of the company’s profits or losses on their personal tax returns.
- A limited liability corporation (LLC) is a hybrid of a sole proprietorship/partnerships and corporations. Owners are not personally liable for the company’s liabilities, but taxes are reported on the owner’s tax returns. There are no shareholders or requirements to hold meetings.
Most businesses take part in contracts in one way or another. Whether they are renting real estate for their storefront, creating an agreement with a vendor or service provider, or making agreements between partners, investors, and employees, contracts are a part of the business.
You might not always need a lawyer for your contract needs, but it can almost always be beneficial to your company. Attorneys are often excellent negotiators, so they can often get you a better deal. If nothing else, they can go over the terms of a contract to make sure that it’s fair.
If you need to draft a new contract, having an attorney help can ensure that your arrangement is legal. It is often tempting to use an online contract template, hoping that it fits your needs. These stock contracts can be problematic as laws vary from county to county and state to state. In some cases, having an illegal element in your contract can invalidate the entire thing. Saving a few bucks upfront isn’t worth the risk of potentially losing an entire deal down the road, especially if it ruins your reputation.
If your business is considering filing a lawsuit or if someone else is suing your company, you will want to consult with a Los Angeles civil litigation lawyer. Litigation attorneys know which cases have a good chance of being successful and are familiar with all of the procedures involved.
It’s important to note that not every lawyer is comfortable inside of a courtroom. While some cases are best settled out of court or in some kind of mediation, you need an attorney who isn’t scared of going to trial.
If you have a case going to trial, regardless of whether you initiated it or are a defendant, your attorney takes care of the hard work. This work includes gathering evidence, interviewing experts, filing motions, examining the other side’s story, and representing you in court. You have a business to run. You don’t have time to take on all of this intricate work, especially when the procedures can be confusing.
Help Your Business Get Started the Right Way
Having a lawyer on board with your new company should be factored into your start-up costs. You do not need to consult with a lawyer for every decision but should make it a habit to keep your attorney involved.
Having an initial consultation is the best way to determine if and how a start-up attorney is right for your business. The important thing is not to wait until it is too late. Your attorney can help you put out fires before you can even smell smoke. Building a solid, legal foundation for your business set you up for success.