Entering into a new business venture can be intimidating for the best-prepared businessperson. For a novice, it can be terrifying. The average man or woman contemplating such a step will see a bureaucratic maze and a seemingly-indecipherable set of hieroglyphics, and little else. Starting a new business will require some assistance, it seems, and one person you simply must have on your team is a lawyer.
That’s not to say, of course, that many people aren’t tempted to begin a new business venture without engaging an attorney’s services. Everyone has heard of LegalZoom and other do-it-yourself websites that promise to make the process of starting a business so simple that anyone can do it. And, yes, anyone can. Knowing exactly what should be done is another matter entirely.
Do-it-yourself websites advertise their services using broad, non-specific statements that assume things no new businessperson should ever assume. For example, a common commercial for LegalZoom implies that anyone who starts a business without an LLC in place is a fool. This may be the case, and it may not be the case. There are benefits to having an LLC, but there are also drawbacks. Other forms of business entity exist, such as the subchapter S corporation, that can be superior to the LLC form – depending on what the business will be selling, what assets it will own, and also on the personal tax situation of the owners of the business. In fact, according to law firm and website EvansPetree.com, “regardless of how popular the LLC form of business has become, it is almost certainly not the best business entity for most small businesses to use, unless additional analysis and work is done.” LegalZoom and other such websites will not walk customers through this analysis, and may leave the new business owners to the tender mercies of the Internal Revenue Service and state tax authorities when it comes to mundane matters such as Social Security and unemployment taxes.
Even if a new business owner stumbles upon the best entity to use for conducting the business itself, there will be other issues that no website can adequately address. For example, if the new business will be selling any sort of product, the owners will likely need a storefront. Commercial landlords generally are experienced business people, and that means they probably have lawyers draw up their leases for them. A rookie business owner seeing a commercial lease for the first time might not understand what the term “common area maintenance” means to the business’s bottom line. Or what the phrase “absolutely net of taxes, insurance, and utilities” might mean. Even the seemingly-simple issue of actually signing the lease is important, as a simple but common error in that area can expose the owner to personal liability on the lease, undoing all of the protections the business owner expected to get from forming an entity through LegalZoom. And there are other dangers lurking in the weeds.
So how does a novice in the business world go about finding a reputable attorney? After all, not all lawyers are created equal, and regardless of what they might say, not all attorneys are equally skilled in business matters. And attorneys are expensive, even more so if, after paying for all the work, the businessperson finds out that this particular attorney lacked small business expertise.
Fortunately, however, there are a number of sources available to anyone facing this question. The United States Small Business Administration’s website contains some very good suggestions at. For those who would prefer a non-governmental source of information, Bankrate has a good summary available here. In addition, there are numerous publicly-available sources of information on individual attorneys and law firms. One excellent source is the Martindale-Hubbell service, which rates attorneys by competence and area of expertise. The Martindale-Hubbell homepage is found at www.martindale.com and provides information on thousands of attorneys in every area of the country.
