8 Reasons A Lawyer Is Essential For Setting Up A Business
One of the most important requirements for setting up a business in India or anywhere else in the world is a lawyer. You may have created the best business plan and formulated an effective marketing strategy but in absence of legal help, your new venture can easily get stuck in trouble. An experienced professional will not only help in avoiding legal issues but also help in taking vital business decisions. A lot of owners feel that hiring an attorney while establishing a business set-up in India, the US or any other market is a needless expense. However, the money a lawyer can save for a company by identifying possible issues will be worth every cent spent on hiring his/ her services. Let’s take a look at why is it necessary to engage a legal professional while beginning a new commercial venture.
1. Identify The Correct Legal Type For The Venture
A vital decision that entrepreneurs have to take before starting operations is to choose a legal type for their new business. This decision affects the tax structure of the new entity and also has implications for the personal assets of owners. Moreover, the legal format also influences the manner in which profits will be shared among multiple owners. An attorney well-versed in business and tax laws will be the best judge of the most suitable type for a new venture. He/she can help in making an appropriate selection which benefits the new company.
2. Framing Error-free Contracts
Contracts are an important part of all kinds of business activities. They are needed to formalize an agreement with an external entity like vendors, dealers etc. Companies need contracts to engage employees or start a partnership with another firm. Foolproof legal agreements help in protecting your interests and securing the business from legal issues. Framing an error-free and efficient contract without an attorney is virtually impossible. A lawyer will guarantee the inclusion of vital clauses that clearly define your liabilities and safeguard the business’ interests.
3. Connecting With Potential Investors
Most people think that a lawyer does not add to much value to the financial aspects of a business. On the contrary, attorneys can be valuable in identifying new sources of funding. The most common financing options for a new venture are personal funds, business loans, or venture capital investments. Startup lawyers can advise on the most profitable route based on your firm’s unique requirements. They will try to find out a source that minimizes the tax liabilities and gives you effective control over the company.
4. Getting Guidance During Legal Trouble
Most business owners hire a lawyer only when a need arises. This is not the correct approach to run a commercial organization. Efficient entrepreneurs are prepared for all kinds of situations. Having an attorney right from the beginning will, in the first place, help avoid a lot of potential issues. Even if a problem arises, the professional will quickly devise a plan to deal with it. In case, your organization is held responsible for a mistake, lawyers will use their skills to mitigate the damages. This is one of the biggest reasons anyone setting up a business must engage an attorney.
5. Accessing Valuable Tax Planning Assistance
Taxes are another important aspect of running a commercial organization. Companies need to know their responsibilities and ensure that the dues are paid on time. Moreover, they are also required to file their returns promptly to avoid any kind of trouble. Lawyers can provide valuable assistance in not only identifying the applicable taxes but also in giving advice that will help minimize the organization’s tax burden. Governments are constantly modifying tax slabs and other rules besides introducing schemes. Attorneys will know about any changes made to existing regulations or a new plan that can help the business in paying lesser taxes.
6. Safeguarding Vital Intellectual Property Assets
Contrary to popular belief that only IT companies or creative people like designers need to protect their IP assets, every business needs a plan for the purpose. Companies need to safeguard their logos, trademarks, and other branding devices. Moreover, they also need to patent a technology or a process developed by them. This helps in establishing their ownership over the assets and gives access to effective remedial measures in case of infringements. Having a lawyer will also ensure that you do not unknowingly encroach on another entity’s assets and avoid legal hassles.
7. Avoiding Complex Employment Disputes
Employees are vital components of business but they can also be a cause of complex disputes. Engaging lawyers will help in framing watertight employee contracts for hiring full-time or part-time workers. Attorneys can assist the organization is formulating the correct procedure of dismissing an employee. They will also be required for drafting the employee manual which will clearly define the responsibilities of employers as well as employees. Legal professionals are also needed for framing the sexual harassment and discrimination policy of the organization. Hiring lawyers will help a business avoid complex labor issues.
8. Formulating An Exit Plan
You must have a plan in place for exiting the business right from the time you started the venture. An exit strategy helps in a smooth transition when the time comes. A good lawyer will be able to guide you in planning the exit strategy for every phase of the business’ growth. This will help in avoiding disputes and charting a clear roadmap for the growth of the company.
Lawyers play a key role in setting up a business and ensuring that it is run smoothly. Entrepreneurs must hire specialist startup or business attorneys before beginning a venture to know about possible legal and tax implications.
Amy Jones is a certified legal expert by profession and she is associated with Ahlawat & Associates-Leading Corporate Law Firms in India. She loves sharing useful information about business, finance and law with needy people. Follow her on twitter and Linkedin.