by Jim Martin
By Paul Lester
What you don’t know can hurt you, particularly if you’re a small business owner, who needs to comply with a blizzard of tax laws, government regulations and other requirements. Expert advice can help you avoid legal, financial and tax pitfalls, but hiring a lawyer can drain cash that could be better used to grow your business. Since every business has its own set of unique challenges, it can be difficult to pinpoint which legal matters you can handle yourself and which require an expert. Here are a few guidelines.
What you can do on your own:
Filing your “doing business as” name. Depending on how you structure your business, you may be required to file the fictitious name (the “doing business as” or DBA) of your business with the local and state governments. This also involves placing a newspaper ad to announce your use of the name. Contact the county clerk’s office for the proper forms.
Applying for an Employer Identification Number. When you start a small business, you must obtain an Employer Identification Number (EIN) for tax purposes. IRS.gov has a free step-by-step tool that helps you quickly apply for an EIN with no extra paperwork. After the application and the verification process are complete, you will receive your EIN.
Creating basic contracts and agreements. Most simple contracts and agreements with customers and vendors can be made either with or without a lawyer. Many boilerplate forms are available on line. For instance, SCORE offers a free non-disclosure agreement template (link is external), which can help keep your business’ proprietary information private. If experience in your industry indicates that are special concerns with some of these documents, read the blank forms carefully to see that they cover your unique needs.
What you may need help with:
Filing a patent. Patenting a product can give you a leg up on the competition, but the process can be expensive and may take several years. This may or may not be your best business strategy. Before you file, consult a patent attorney to evaluate whether your product is worth patenting, to find out what type of patent you should pursue and to identify what rights you will or will not have as a result of the patent.
Forming a corporation. Although a partnership, limited liability company or partnership can often be formed without legal help, forming a corporation is a more complicated matter. Incorporating involves a complex set of legal and tax requirements at both the state and federal levels. If the requirements are not fulfilled, you could lose precious time and money. A business formation lawyer can help guide you through the incorporation process painlessly.
Dealing with lawsuits. If you need to take legal action or if others take legal action against you, you will need to hire an attorney. Lawsuits can arise from copyright infringement, labor laws, health code violations, environmental damages and many other matters. Hire an attorney who specializes in the type of suit you are facing.
To find an attorney, you can check the American Bar Association, (link is external) refer to local listings or simply ask friends, family or other small business owners for referrals. After you have narrowed down your search, always interview the attorneys to see if they are right for you. You can also get free and low-cost business advice through the Small Business Administration’s resources partners throughout the country. Find a SCORE chapter, Small Business Development Center or Women’s Business Center near you.
Paul Lester is a frequent writer for the SBA.gov website.