Small Business Budgets – Why You Need to Include Legal Fee
If you are planning to start a small business, hopefully you are forecasting your revenues and creating a budget. I highly recommend that you include legal fees in the budget for your start up. The money spent on an attorney upfront, could save you lots of time and grief in the future. At the same time, I also understand that sometimes you are starting a business with very little money. In that case, an attorney might seem like an extravagant expense.
If you can afford an attorney, the following list is things that an attorney can help you with:
• What is the best business structure for your needs? (In US: Sole Proprietor, Limited Liablity Company, Partnership etc)
• Setting up the business
• Review contracts/sales agreements that you plan to utilize in your day to day business operations.
• What kind of disclaimers you should have?
• Intellectual property rights issues – trademarks, copyrights, patents,
• What kind of insurance should you be carrying?
• Review of contracts you are entering into.
• Employee law issues – polices & procedures, use of background checks, medical screening, hiring, terminations etc.
If you can not afford an attorney:
-You may be able to spend hours researching and trying to prepare the documents yourself. However, it may be a better use of your time and resources to pay someone else to do it.
-The local Small Business Development Office (SBDC) or SCORE office may be able to provide with you some valuable assistance. Even if you can afford an attorney, I highly recommend that you use either the SBDC or SCORE office as a resource.
-If you are starting a new business that is franchised or affiliated with a larger existing company, the larger company will typically provide some legal guidance. For example, if you open a McDonald’s franchise or start distributing Avon beauty products, the larger company will have policies in place to help avoid legal problems.
-If you are opening a business that is actively involved with a local, state and national organization, there may be a wealth of legal resources available to you. For example, if you plan to become a real estate agent – part of your membership benefits to the local, state and National Association of Realtor’s, includes guidance and polices that will help you stay out of legal problems. Of course, you have to make sure you are educated, informed and committed to staying in compliance.
Ideally, you can include a consultation with an attorney before you open your new business. This will be more important with some types of businesses than other. Regardless, it is important that you consider the environment in which your business will be operating. When it comes to legal matters, an ounce of prevention is worth more than a pound of cures.
Best wishes in all of your business endeavors,
P.S. Did I leave anything off my lists above? If so, please feel free to share what I overlooked in the comment section below. Together we can help our fellow entrepreneurs achieve success.