September 4, 2017
KNOW HOW

Why legal support is important for small businesses

Escobar is an attorney with Oxford law firm Doucette & LaRose, specializing in small and midsize business counselling.

When companies are starting up, they often overlook the necessity of including legal support in the budget. Legal support is viewed as a luxury, or something not needed unless the business gets into a legal mess. In reality, legal support is especially important for small businesses – at the startup phase, during the growth and development cycles, and throughout the life of the business.

At the startup phase, businesses are faced with selecting an entity type. Should the business incorporate, register as an LLC, or maybe an LLP is the best choice? Proper legal support can help businesses navigate the details of specific entity requirements or advantages and discuss the best options based on immediate needs, as well as the company's future goals. Entity choice needs to fit long-term expectations, and should not be made hastily to check the task off a to-do list.

Throughout the life of a business, legal guidance on a wide range of contracts will be necessary. Contracts play a major role for businesses, regardless of size. For small businesses, the protections offered by contracts can be essential to the organization; from negotiating commercial leases to critical vendor agreements. The guidance of a trusted legal expert is invaluable in such situations. Understanding the rights and obligations contained in an agreement and negotiating the best terms can be a difference maker.

However, entering into a contract when not required or recommended can be onerous. Businesses need to understand situations when contracting is beneficial and when formal agreements can jeopardize certain rights already provided by law. Even documents not intended to be a contract can create implied obligations if not drafted properly. Being bound by unintentional contracts is burdensome for small businesses. Signing contracts is easy, getting out of a bad one is not.

Working with a trusted legal advisor is exceptionally beneficial when the unexpected occurs. Businesses don't usually get advance warning when things go wrong. The middle of a tailspin is not the best time to find an attorney. Having an established relationship with a trusted attorney familiar with the business will likely offer more comprehensive and effective guidance when it's needed most.

Additionally, emergencies are not the only situations that call for advice from your attorney. As small businesses owners know, things are constantly popping up – from trouble with employees to surprise opportunities to grow. Having a legal partner a phone call away will ensure a quick, decisive response.

Small businesses have the most to lose if things go wrong and, unfortunately, it is impossible to protect a business from every possible legal issue. However, businesses can and should work to minimize their risk of exposure and maximize protections. Dedicating upfront time and a budget line item to finding and working with a trusted attorney is an investment all businesses should make.

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