When You Need a Lawyer

If you're wondering whether a lawyer is worth the cost, ask yourself one question. Are you comfortable risking your entire business on your own knowledge of contracts, liability, real estate, taxes, and/or estate planning? Assess the risk involved in doing things without legal advice. Even if you're comfortable with some tasks and their risks (registering a sole proprietorship on your own, for example), it's wise to seek help when things get more complicated (taking on a partner).

Books and software programs that guide you through everything from establishing a partnership to incorporating a business might be good for research, but these reading materials are no substitute for legal advice. In fact, this kind of partial or incomplete knowledge could expose you to significant risk: If you make a mistake incorporating your company, for example, you may not have the legal protection from liability that you're counting on.

There are some obvious times when you'll need a lawyer — if you're filing suit against someone in anything other than small claims court, for example. But you should also consider bringing a lawyer on board right from the beginning of your start-up process even if you're a sole proprietor. A lawyer can advise you on the most appropriate structure for your business, and as the business issues grow more complex over time, they'll have a clear understanding of your operation.

If you're starting a corporation, professional legal advice will help you avoid mistakes that you'll pay dearly for later on. If you're starting a partnership, a lawyer is pretty much a must. Most partnerships dissolve at some point — sometimes amicably, but often in conflict. Partners need an agreement that includes an exit strategy, detailing when and how each partner can leave the business or buy out the other partner(s).


Many home-based businesses operate on little more than handshake agreements between client and service provider — and that might be fine in a lot of cases. However, your lawyer can help you identify those times when a written contract is preferred and can help you make sure that the contract protects your interests.

Intellectual Property Protection

Intellectual property refers to work that you've created and therefore own the rights to — from inventions to books. If you need to apply for patents or copyrights or if you'll be creating a product (such as software, writing, or graphic arts) and then selling the right to use it (licensing it) to others while you retain ownership, then you'd be wise to have a lawyer with experience in intellectual property review your contracts. This also applies if you're hiring independent contractors to create the intellectual property on a “work for hire” basis (meaning that you own whatever they create for you).

Equipment and Real Estate

Will you be taking on a long-term lease of equipment, such as vehicles, construction equipment, computers, or food preparation equipment, or real estate? You'll want to consult your lawyer to ensure that the lease agreements have enough flexibility and protection for you and your business. A tax lawyer or financial expert can help you work out whether a purchase or lease makes more economic sense for your business.

If you're considering buying a franchise or an independent business or you're selling or franchising your own business, you also need legal advice. Have your lawyer review all of the contracts and paperwork to ensure that the terms and the fees are reasonable and that you're protecting yourself both legally and financially.

Similarly, if you have concerns over real estate, either existing or future, a lawyer can provide strategic advice. They can, for example, investigate local zoning regulations if you don't want to do it yourself and apply for a variance if necessary for your home-based business.

Lawyers can also sort through complications regarding multiple owners of your home. If you're starting a business in a house you own with your two sisters, they can outline your rights and responsibilities and help you avoid potential conflicts.

Tax and Estate Planning

Your law firm may have a tax specialist, lawyer, or accountant who can help you structure your business to minimize your taxes. The more taxes you pay, the more reason to get all the help you can. And, of course, if you run afoul of the IRS or the CRA, your lawyer can help negotiate with them to come to a reasonable settlement.

Tax issues may also be part of estate planning. Will your business survive you, perhaps being taken on by a spouse, son, or daughter after you retire or pass away? If the business has value beyond your own involvement in it, you'll want to consult a lawyer to help organize the transition. You may also want to consider the possibility of marriage breakdown and make plans for the business in case that happens.

Collections and Bankruptcy

Does a major client owe you a lot of money? You might turn it over to a collection agency, which will take a percentage of any money they collect, or you might use the persuasive power of your attorney to help collect what you're owed. (Sometimes, a letter from a lawyer is all that it takes.)

You may also face the situation where one of your customers declares bankruptcy, leaving you in a sea of creditors who are all looking to recoup as much of their money as possible. A lawyer can help you maximize the amount of money you receive when the customer's assets are divided up.

In a worst-case scenario, you may be facing bankruptcy yourself. A lawyer might succeed in keeping you out of bankruptcy court by negotiating with your creditors. If you do file for bankruptcy, a legal specialist can help you keep as many assets as possible.

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