I was speaking with several entrepreneurs recently and they were all in the start-up phases of their businesses. Nearly all of them had active business partners in their business. However, each one asked me the same question:
“Dan, what is the need to make sure we formalize our business in the start-up phase. Legal fees just don’t seem to be a necessary expense right now.”
This is a very dangerous opinion to have. The only thing worse than not handling all the legal matters for your business correctly, is choosing the wrong attorney for your business.
In my experience, I have seen a business not handle the legal side during the start-up phase correctly, normally only a few thousand dollars in legal expenses, and it created a massive problem for the business owners and partners. In fact, it cost them over $150,000 in legal fees!
Just to say a few items. Number one, you need to incorporate, whether that is an LLC or a corporation. You need to do this early to protect yourself from personal liability. Number two, you need an operating agreement or a set of corporate by-laws. The failure to do this can be devastating should a dispute or litigation arise in the future. Number three, you need an agreement among your partners. Should a dispute arise, and disputes do arise in business, you will want to have that agreement in place to ensure that everyone is protected.
This is just a few. Depending upon your business you may need ongoing counseling and trusted business counsel to guide you on such decisions as employee issues, non-compete agreements, employment agreements and contracts, vendor agreements and contracts, tax planning, and unfortunately, litigation.
In addition, if you are a start-up business that plans on offering equity in your company to others or seeking investment capital from an outside investor, you are going to need a group of trusted professionals to guide you along the way with such decisions as how much should you give away to a potential investor. Remember, if you give too much away in the beginning, this could affect you in the future. Also, you will have decisions such as whether you want to seek capital through an investment or whether you want to take on private debt.
Whatever decision you make, you will want to have a trusted legal counsel in your corner to guide you along the way as your business grows into the future.
If you are an entrepreneur and a business owner, please call your Nashville Tennessee Business Law Attorney today to discuss your legal issue.
Give us a call at (615) 472-2482 or Click Here to Schedule a time to discuss your business or corporate law legal issue.