Should I get a lawyer when starting a business?
Starting Your Start-Up: A Guide to Legal Steps
Once you've conceived a brilliant idea for your start-up, is it necessary to hire a lawyer to get the ball rolling? Not always. Many initial steps involved in selecting and establishing your business entity can be handled independently. However, as your business progresses—especially when you begin hiring employees or entering into complex agreements—you may find it beneficial to seek legal assistance. Remember, if there's any uncertainty at any stage, hiring a lawyer can help you avoid costly mistakes and prevent you from getting into situations with unintended consequences.
Choosing Your Business Structure
You need to determine the ownership structure that fits your new business best. Most states provide information on their Secretary of State (SOS) website regarding the various types of business entities available, such as sole proprietorship, LLC, corporation, and partnership. Numerous online and offline resources are also available to help clarify your options.
Selecting the right ownership structure will depend on factors such as the nature of your business, the number of owners involved, and your financing. While many entrepreneurs make this choice independently, it’s wise to discuss potential questions regarding liability, taxes, and ownership with a lawyer or accountant before finalizing your decision.
Checking for Name Availability
Choosing a name for your business is another essential initial step. Although there are legal requirements for naming your business, this task can typically be accomplished without legal assistance.
First, check the availability of your desired name in the state where you intend to form and operate your business. Most states maintain a business name database on their Secretary of State (SOS) website, listing all registered businesses. Instructions for checking name availability and reserving your business name can usually be found there.
Once you've confirmed that your chosen name is available, ensure that it isn’t a registered trademark by checking online with the U.S. Patent and Trademark Office's Trademark Electronic Search System (TESS).
Forming Your Business Entity
After deciding on a business structure and a name, you can proceed to form your business entity. If you choose a sole proprietorship or partnership, you likely won't need to file any forms or pay fees to officially establish your business (though partners should create a partnership agreement).
If you opt to form an LLC or corporation, you'll need to file organizational documents with the state and pay a filing fee. Most SOS offices offer helpful information and forms for creating your LLC or corporation. These forms typically require basic information such as:
The name and address of your new business
The name and address of your registered agent, and
A few other necessary details.
Detailed instructions on completing the form, paying the filing fee, and filing the document with the state can usually be found on the SOS website. Alternatively, if you prefer not to handle the paperwork yourself, you can utilize our LLC formation or corporation formation services.
In addition to registering your business entity, if you're forming a corporation, you'll need to draft bylaws, or an operating agreement if you're establishing an LLC. These internal documents outline the rules and procedures for your organization, including how to conduct meetings, make decisions, and dissolve the business. For resources and guidance to create these documents independently, visit Nolo.com for books, articles, and online products.
As part of your business setup, remember to open a business bank account to keep your new business finances separate from your personal finances. To do this, you’ll need an Employer Identification Number (EIN) from the IRS, which you can apply for online. Once you have your EIN and the stamped copy of your formation documents from the SOS, you can visit a local bank to open your business account.
