Business Startup … What Legal Involvement is Necessary?

“I’m planning on starting my own business, and money is going to be tight at first. What is the minimum amount of legal involvement I’ll need, when I’m just starting out?”

– Greg W.

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Hey Greg,

Thanks so much for writing in. Great question. I’ll start by applauding you for taking the leap into entrepreneurship. Owning your own business can be a tremendously rewarding, and fulfilling endeavor. You certainly aren’t alone in operating within a tight budget as you first start out. As a result, it is not uncommon for business owners to want to skimp on attorney involvement. The assumption is that because they are just starting out, legal issues they might face will be minimal. And usually, that is a safe assumption.

However, while it is unlikely you will find yourself in legal trouble right out of the gate, that does not mean you shouldn’t involve an attorney. In reality, I would encourage any new business owner to set aside funds to cover legal aide as a standard part of establishing any new business.

Involving an attorney upfront will ensure that your business is set up correctly. It will also help to keep you and your assets protected, should you ever face legal issues down the road. Having your business set up correctly will also give you peace of mind, which will be critical as you move into this next phase of your life. Owning and operating a business is not an easy job. Stress and anxiety tend to come with the territory. Anything that you can do to minimize the number of stressors that come with owning a business, would be to your advantage.

To answer your question a little more directly, I would say the minimum amount of attorney involvement would be in how you register the business. Whenever you register a new business with the government, you have various options as to the type of business it will be. Whether you establish a sole proprietorship, an LLC, a partnership or a corporation, each business type has stipulations that any business owner needs to know.

A good attorney will be able to explain how each of these different business types will affect you, and allow you to make a more informed decision about which direction you should go. Each option will have different tax implications, and will mean different things regarding how your personal property is handled.

For example, let’s say that you decide that you set your business up as a sole proprietorship. When you set your business up as a sole proprietorship, any asset that you own that is also under your name, is now vulnerable. In other words, if the title of your house, or your car are also under your name, the filer of a lawsuit against you could come after those assets.

Having an attorney involved as you set up your business can help you avoid these scenarios. They can help protect your assets from being taken. They can help you avoid future lawsuits. And they can help you go into any business transaction knowing you are legally protected, should things go south.

Just to be thorough, let me tell you about some situations that I’ve seen as an attorney. It is not at all uncommon for me to have clients who avoided involving at attorney from the beginning. They will often register their business through popular online sites, and assume that they are then protected. Unfortunately, that is rarely the case. Every industry and every business is a little bit different. Each industry has its own set of standards and courses of conduct that can have deep implications over an improperly established business. Too often have I seen clients face bankruptcies, lost homes, and lost businesses due to completely avoidable scenarios such as mis-titled assets or overly vague legal documentation.

At the end of the day, my advice to any new business owner is to avoid taking the leap too soon. Before you ever start a business, you want to ensure you have enough margin & capital built in to at least hire a good attorney and a good accountant. While it is not my intention to rain on anybody’s parade, if you are unable to set aside enough funds to pay for an attorney and an accountant, then you may want to question if you are truly ready to start a business. Starting a business is not something that should be entered lightly, and my primary goal is to see anybody who decides to do so, succeed. The success of any business is directly related to the team that a business owner surrounds themself with. It has been my personal experience that a good attorney and a good accountant are essential parts of that team.

If you have any questions at all, or need further assistance in establishing a new business, we always encourage you to call our law firm, and we’d be happy to talk through it with you. We offer a free 30 minute consultation, and would love to talk to you about your new business.

Our Clearfeld office can be reached at 814-765-9611, and our DuBois office can be reached at 814-299-7697. As always, you can visit us online at or check us out on Facebook at

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