It is important when calculating the startup costs of your business to consider what legal fees you might expect. When creating a startup business budget, professional fees are typically a major consideration and, aside from accounting fees, are paid almost exclusively to legal professionals. It’s tempting to try and cut out legal fees by tackling legal issues without an attorney, but oftentimes this is not a good idea. So how much can you do yourself? When is an attorney necessary? Here are a few things to consider:
Reduce your business’s legal fees by seeking advice from your local Small Business Administration (SBA) office or your Chamber of Commerce office. These organizations can provide general information on required licenses, zoning laws, local requirements etc. without leaving you with legal fees from consulting an attorney. You should also consider speaking with organizations like the Service Corps of Retired Executives (SCORE) for advice. For more specific information and advice specific to your category of business and your geographical region, however, it will likely be necessary to consult an attorney. Additionally, join your local chamber of commerce, trade groups, entrepreneurial organizations, etc. Learn from other business owners’ experience, and share your own.
Look into online legal-form services like LegalZoom and FreeAdvice to help cut down on legal fees. Most of these companies offer a blend of services ranging from online legal forms to fill out yourself, search engines for seeking out real attorneys, help with creating and editing legal documents, and useful advice on solving legal problems and cutting out legal fees. Legal resources like RocketLawyer provide interactive legal form templates, which you can complete, edit and share for free with the service. These services are an excellent way to reduce your small business’s legal fees.
Limit your liability. While it won’t reduce your initial business startup legal fees, you might want to consider forming your business as a Limited Liability Company (LLC). LLCs encounter fewer ongoing requirements and formalities than corporations, they are able to choose any organizational structure they would like, they often don not pay taxes at the business level, and the formation of an LLC can help earn credibility for a new business.
In most cases, new business owners with need to hire an attorney to handle complicated legal matters. Some important considerations to make when choosing an attorney to hire for your business:
Think about the type(s) of issues that might require the help of an attorney: Corporate governance, Intellectual Property (especially if your enterprise deals in media, design, etc.), Employment Agreements/Contracts, Taxes, Licenses, and Real Estate.
Working with a large law firm or a small firm?
Hourly rates for attorneys at large firms are typically higher than those at small firms, but keep in mind that solo practitioners, or lawyers at small firms are often very specialized practitioners and may not be able to meet all of your business’s needs. Additionally, larger firms hold a degree of credibility, or legitimacy, especially in court, that a smaller firm or solo practitioner may not have.