If you’ve never worked with a lawyer before, you might find the process tedious, confusing, and downright pointless. After all, what do you need a lawyer for when you’re just getting started in the world of business? It all seems a bit excessive before you start dealing with bigger numbers. However, if you’re creating a startup, you’ll need to talk to a lawyer more often than you might think. Lawyers serve essential functions for businesses, no matter their size. A startup needs legal consultation as much as a bigger company, though the number of lawyers involved might be smaller.
You might be wondering: why bother with lawyers? What is the role of a lawyer in a small business, anyway? Well, there’s no simple answer to this question, as just about every aspect of a startup will require legal assistance. Whether you’re trying to do your taxes or file a report on an employee, legal help is an absolute necessity. Let’s go over the basics of what lawyers can do for your company and how it can benefit even during the startup phase.
Why are lawyers necessary for startups?
There are plenty of reasons you might need a lawyer when running a business. Even the most benign and uninteresting of products and services will require some form of legal backup. Laws exist for a reason, and lawyers are great and interpreting these laws and showing businesses how to act in accordance with them.
Any large company might have an entire legal team dedicated to a specific task simply because it’s a smart decision. You want experts in every area of your company, and a legal team can provide you with expertise when it comes to any and all issues that are connected to the law.
Lawyers help deal with the government
It’s no secret that just about every product and service is regulated in some way. It’s understandable, considering the fact that governments want to keep their people safe from bad business practices. Anything that could potentially harm the health and wellbeing of customers has to be checked out thoroughly. Guidelines and regulations help minimize the risk of harm, which is why they’re the standard for most governments.
Adhering to these rules not only allows you to market your products in a legal way but also confirms the legitimacy of your company. A lawyer can help you follow the regulations in an accurate and efficient way. They can interpret the complex wording that is often a part of these regulations and provide your producers or engineers with a simplified version. It’s a lot easier to follow the rules if you know what they are exactly.
Lawyers simplify taxes
Taxes are hardly ever simple, whether you’re running a startup or a large conglomerate. Knowing how to handle your taxes can help you save extra money while avoiding any unnecessary tax mistakes and liabilities. What if you’re not aware of all the different things you can use as tax write-offs in your industry? There’s often a lot of money that can be saved with proper knowledge of tax law, which is why having a lawyer is absolutely essential for up-and-coming startups.
The taxes you owe will depend on many different factors that are often difficult to calculate. An accountant is your first line of defense when it comes to taking care of taxes, but you’ll need a lawyer as well. They know when and how to take care of issues with taxes, and they can help you avoid problems with the government when mistakes are made.
Lawyers settle disputes
Even when you run your company smoothly, it’s inevitable that you’ll run into problems and disputes. A disgruntled employee might have an issue with the way they were terminated, or they might want to file a lawsuit against the company or fellow employees for one reason or another. Acting without guidance can exacerbate issues if you don’t have legal representation.
A lawyer can and will show you how to act whenever there are threats of litigation. They know what kind of paperwork you need to fight a suit and how you should do it. A startup might not have problems when it comes to collecting necessary data, but there’s always a risk of using it improperly. This is where a good knowledge of the law can come in handy, and there’s no one that knows it better than a lawyer.
Even when a lawsuit happens, your lawyer will already be up-to-speed with the details of the suit and how to handle it, especially if they’re a constant part of your team. This makes it easier for them to nip the problem in the bud if there’s no real case or reach a settlement as soon as possible.
Lawyers keep the founders happy
Sometimes, it takes the combined ideas and effort of multiple individuals to get a startup going. At the beginning of your startup journey, having multiple founders doesn’t seem like a big deal. However, the more success you achieve, the quicker the issues start to rise. What direction should the company go in? What kinds of products and services should it offer? The founders will have certain expectations when it comes to a startup, and it’s important that there’s an agreement. Going for a formal agreement would be the best course of action.
This is another situation where having a lawyer can come in handy. Philosophical and business differences are extremely common in startups that have multiple founders. giving every founder what they want is often difficult, but it’s something a lawyer can help with quite a bit.
At the same time, how the equity should be divided needs to be part of the discussion as well. Factors like whose idea it was, how much certain founders work, and capital contributions need to be considered when making these decisions. A lawyer can help mediate the discussion and make it easier for founders to get what they feel is fair. While it won’t always work and some founders may feel cheated, having a lawyer is one of the best ways to ensure a fair split of rewards and responsibilities.
Lawyers save your company money
Whether a lawyer works on settling disputes or protecting your copyright doesn’t matter, they all have one role—to save your company money. They know the ins and outs of the laws that you have to follow to function as a startup in your industry, which means they also know the most efficient way to adhere to them. Those who try to handle legal issues on their own often end up with much higher bills due to bad planning and unforeseen circumstances. A well-prepared lawyer handles litigation and paperwork with relative ease, giving you more time to focus on other aspects of your startup.
It can be difficult to quantify just how much money a lawyer can save your company. It depends on factors like the skill of the lawyer and how often you require assistance with legal matters. For most startups, it’s more than worth the trouble to get a lawyer. A few disputes here and there can make an enormous dent in your budget, especially if you aren’t careful. With an experienced litigation lawyer by your side, you don’t have to worry about going into a lawsuit unprepared. By offering you guidance and creative solutions, lawyers make it easier to win suits, saving you money that would otherwise be lost.
Not to mention, lawyers save you even more money by preventing disputes and creating viable settlements. Remember—it’s a lot better to avoid a lawsuit entirely than to win one. In most cases, you can achieve this pretty easily with the help of an expert lawyer.
Lawyers help protect copyright
A good idea can only help you as long as you can protect it. This is why we have copyright and trademark laws. If you came up with a great idea for a product or service, you have to make sure that it stays yours. Otherwise, someone else can copy the exact same concept and profit off of it before you do.
While filing for a copyright or trademark isn’t too difficult of a task, the waters get a bit muddy when you include third-party contractors. Startups often outsource part of their creativity while retaining the end result. This can be an issue if you don’t have adequate paperwork and legal help. Whether or not a contractor owns the idea they come up with while cooperating with your startup is up for debate depending on the rules of your contract. Knowing how to draw up and enforce an iron-clad contract is crucial. Especially if you don’t want to lose out on the intellectual property.
When it comes to copyright law, it’s recommended that you consult legal experts in that particular field, as it can get pretty complicated.
Conclusion
There are very few businesses that don’t require some level of legal assistance or consultation. When you want to reach a bigger audience, you have to take on certain responsibilities. Lawyers help you handle them in the simplest and most appropriate way. It’s for this reason that just about every company has a team of lawyers ready to jump at any legal issue. Even startups have to have at least one lawyer for any of the aforementioned reasons.
Make sure that you hire someone with experience and expertise to handle everything from your taxes to your copyright documentation. You’ll be thankful once you get through tax season without issue and avoid an unnecessary suit that would otherwise cost you thousands.
