Hiring a Lawyer to Help Start Your Business: Everything You Need to Know

Hiring an attorney to help you start your business can be a daunting prospect. However, it’s often necessary to prevent legal problems down the line.

Last updated on January 17th, 2019

Every business, even small businesses, can benefit from having a lawyer.

For instance, a lawyer can provide important guidance if you decide to convert your business from a sole proprietorship to a limited partnership. Similarly, a lawyer can advise you about zoning laws, tax laws, copyright and trademark laws, buying and selling of property, and other challenges that will come up in a business.

You’ll also want a lawyer on call and familiar with your business if you ever have to deal with a lawsuit. Suits against businesses for issues ranging from discrimination to environmental issues are brought every day, and it’s important that you aren’t caught unprepared.

Of course, not every business needs a lawyer. Sole proprietorships and other small operations can generally get away with doing business without a lawyer.

However, at the same time you need to realize that if you’re in the process of being sued before you hire a lawyer, it might already be too late.

In this article, we’ll cover several broad services which you might want to consider hiring a business lawyer for. From contracts to taxes and intellectual property, having a lawyer look over your business before problems arise can save you a great deal of money and headache down the line.

Should I Hire a Lawyer to Convert My Business?

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Running a business as a sole proprietorship does not require registration–in fact, it happens any time an individual starts making money on their own without any kind of formal registration.

In a sole proprietorship, your money and the business’s money are in the same “pot.” You don’t have to keep them separate or have different bank accounts. Also, your money and the company’s money are taxed together.

While this may seem convenient, it also comes with several major downsides. From an accounting standpoint, you may end up paying more taxes overall. From a legal standpoint, operating as a sole proprietor leaves you personally liable for any harm that might result from business operations.

Since you and your business are joined, you are responsible for all the company’s debts, liabilities, and legal issues.

Put another way, if the business goes under, so do you.

This is why many business owners eventually decide to change their business to a registered entity, such as a limited liability company (LLC), once their business is off the ground.

How to Register Your Business as an LLC in Virginia

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An LLC is just like it sounds – a company with limited liability. The company itself, not its owners or partners, is responsible for any debts or damages.

The LLC is a relatively new business entity type, and it was created to provide a middle ground between informal partnerships, and the formality of a full-blown corporation. It’s also handy as a pass-through tax entity.

The LLC is my go-to business entity for most new ventures, and what I recommend for many small business owners and operators.

Even if you’ve been operating as a sole proprietorship, registering your business as an LLC isn’t that complicated.

Every state has different requirements for setting up an LLC. Your attorney can help you understand the requirements, fees, and laws for LLCs in your state.

This leads us to the first major way an attorney can help you start your business. While operating as a sole proprietor is relatively simple, converting your business to an LLC takes a bit more work.

Registering your Business as an LLC

In general, registering your business as an LLC takes 6 basic steps:

1) Make sure your company name is available – When you legally register your company name, you’ll have to make sure that it’s not already being used by anyone else in your area. Otherwise, your application will be denied. Further, you might even risk having a trademark infringement case filed against you.

2) Draft and file all documents and agreements – When you register your business, you’ll have to prepare several documents and agreements detailing who’s involved and what you’ll be selling.

You’ll want to draft articles of organization and any other relevant documentation as soon as you decide to register as an LLC. You may file this paperwork with the Virginia State Corporation Commission.

3) Get a new bank account – You may not need a lawyer for this, but it’s important to remember that you’ll need a new bank account to keep your personal finances separate from the company’s.

4) Find a registered agent – In order to register a business in Virginia, you’ll need to choose a registered agent. A registered agent is designated to receive service of process in the event someone files a lawsuit against your business. While you can act as your own registered agent, most businesses choose to have their lawyer as their registered agent.

5) Prepare an operating agreement – Once you complete the steps above, it’s generally recommended that you also prepare an operating agreement which details how your business will run. While not required in Virginia, an operating agreement can prove helpful down the line in case problems arise in your business.

6) Maintain your LLC after it’s approved – In Virginia, all LLCs are required to file an annual report with the Virginia Secretary of State to maintain their LLC status. They also must pay an annual fee of $50.

Hiring a Lawyer to Draft Your Articles of Organization

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The Articles of Organization are the documents that allow you to legally register an LLC. For many businesses, online LLC registration in Virginia means the Articles of Organization are auto-generated.

Another important document that a lawyer might draft when registering your LLC is known as an Operating Agreement. This document, together with your Articles of Organization, forms the entirety of your business on paper.

Drafting these documents on your own is possible, but hiring a lawyer to help you with them is recommended. We’ll briefly discuss the purposes of each document as follows.

Articles of Organization

The Articles of Organization are documents that spell out how your company will be structured.

In these articles, you’ll list your registered business name, the location of your business, and other structural basics of your business. Your lawyer can help you file your Articles of Organization with the Virginia State Corporation Commission when you register your business.

Operating Agreement

The Operating Agreement details the day-to-day management responsibilities of the company.

LLCs have multiple possible organization structures. While registration is simple, choosing whether your LLC will be member-managed or manager-managed may not be.

Your Operating Agreement can include who is responsible for managing the company (a member, both members, or a manager), how much time each partner must invest in the company, and the nature of the partners’ interest in the company.

It’s important to work out the details of your Operating Agreement early on, since it spells out how the company will be run, and how you should proceed in the event something goes wrong.

Choosing a Registered Agent for Your Business

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Virginia Code § 13.1-1015 requires all Limited Liability Companies to maintain a registered agent for their business.

A registered agent is a responsible third party who receives and communicates messages on the company’s behalf. A registered agent also serves the company by receiving government and compliance-related notices (tax forms, notice of lawsuits, etc.) and communicating these messages to the LLC in a timely manner.

Registered Agent Requirements

You can’t just choose anyone as your registered agent. There are several requirements your registered agent must meet to be valid in Virginia.

Specifically, your registered agent must:

  • Have a permanent residence in Virginia.
  • Be a member of the Virginia State Bar OR part of the management of the business entity. This could be an officer, member, director, or partner.
  • Be a business organized specifically to act as a registered agent (there are registered agent services that businesses can hire).
  • Agree to serve as the business’s registered agent.

Your attorney can advise you on setting up a registered agent, or act as your resident agent themselves.

Many businesses have their attorney act as their registered agent, since attorneys meet the state requirements, and they know state and local business law.

Can I be my own registered agent?

It may be tempting to cut out the middleman and act as your own registered agent. However, there are a few things you should remember when considering taking on this important role yourself:

You don’t want to use your home address – As mentioned above, the registered agent has to provide a physical address. This is where regulatory agencies will send official correspondence.

If you run your business out of your home, you’ll have to provide your home address. This cuts down on your privacy, of course, and it could mean people coming to your front door if you’re ever served with a lawsuit.

Registered agents must be available during business hours – One of the requirements for a registered agent in Virginia is they must be available to receive correspondence during regular business hours.

Unless you are physically at your office during every business day, or you have full-time employees who are, you won’t be able to act as your own registered agent.

You might miss some mail – If you are your own registered agent, that means you’re responsible for every time-sensitive notice that comes in the mail.

If you miss one or forget about it, you might end up with fines or worse for your company. It’s worth it to pay a small fee to have someone else stay on top of things.

Registered Office

Another requirement for being a registered agent is that they must have a registered office.

This is a physical brick-and-mortar address where the registered agent can be found. The registered office can be a personal or business address.

Note that the address can’t be a P.O. Box unless your town or locality has less than 2,000 residents.

Changing Your Registered Agent

A business may change their registered agent at any time.

The Virginia State Corporation Commission maintains a list of all registered agents. If you want to change yours, you can access your business through the Virginia SCC website, then file a change in your registered agent.

Keep in mind that your new registered agent is held to the same requirements as your initial agent. You cannot choose an agent that does not meet the basic requirements.

Resigning as Registered Agent

If you are a Virginia registered agent who would like to resign from your post, you may file online in the same way as a business might change their registered agent. There is no fee issued for a registered agent’s resignation.

As a registered agent, you are responsible for filing your resignation.

Hiring a Lawyer for Foreign Business Registration

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“Foreign business registration” sounds as if your business is moving out of the country, but that description is misleading.

When you file for foreign business registration (sometimes called foreign business qualification), it just means that your company plans to do business outside of the state you originally registered in.

For example, if you own a business in Maryland and you intend to open a branch in Virginia, your business must file as a foreign business entity.

Of course, your business has to be registered in your state before you can register as a foreign business in another state.

How to File for Foreign Business Registration

Filing for foreign business registration is a somewhat complicated process that you’ll want to consult with a lawyer about. Your attorney can help guide you through the steps for filing as a foreign business entity.

Here’s a quick summary of the steps you’ll go through to do business in Virginia:

1) Apply for a certificate to transact business in Virginia – The first thing you’ll want to do is apply for a certificate to transact business.

The application you use will depend on what type of company you have (such as a corporation, limited partnership, limited liability company, or business trust).

2) Obtain a certified copy of the business’s organizational documents – Your attorney will help you understand which documents you need, depending on your type of business. Generally, these documents require fees to file.

3) Send the application, documents, and fees to the Office of the Clerk – Each application will include details about how to file.

Also, if you do business in another state, you’ll have to pay taxes in that state. So, you’ll also need to register your business with the Department of Taxation.

In addition, if you have employees in that state, make sure you register with their Employment Commission.

Additional Licenses

Your attorney will also be able to tell you if you need to register for any additional licenses to do business in Virginia. For example, you’ll need a separate license for realtors, insurance agents, and contractors.

If you fail to properly register as a foreign business entity, you could face severe penalties, fines, and back taxes.

Not only that, but if your company has to sue to recover damages or enforce a contract, you wouldn’t be able to use the state courts if you’re not registered to do business there.

Registration vs. Domestication

If you register in another state as a foreign entity, that means you’re keeping your company’s “home base” in its original location, but transacting business in another state. Your company remains formed, organized, or incorporated under the laws in its original location.

This is different than domesticating your business in another state. When you domesticate your business in several states, that means you are forming a new company in each state, and therefore creating separate entities in each state.

Advantages of Foreign Registration

When you apply for foreign registration, you still only have one company – you’re just doing business in other states.

Therefore, you’ll only have one board of directors, one set of bylaws, and a single Articles of Formation for the company.

When you domesticate, you’ll have to do all that for each business in its own state, since they are separate entities.

Advantages of Domestication

When you domesticate your business, you limit your liability.

Since each business is its own entity, each business is solely responsible for its liabilities. For instance, if one entity files for bankruptcy, it will not affect the others. This protects each business from the debts and liabilities of the others.

Other Ways an Attorney can Help your Business

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As your business expands, you might consider other important issues like establishing and protecting a trademark, filing annual paperwork, and even expanding your business internationally.

We’ll detail how a lawyer can help with each below.

Establishing a Trademark

A lawyer can advise you about when and how to pursue registering a trademark for your business. They can explain the difference between intent-to-use and used-in-commerce trademarks.

Your lawyer can also give you good advice on how to choose a strong mark, and how to submit an application that will be approved by the United States Patent and Trademark Office (USPTO).

Filing Annual Paperwork

Business licenses, zoning permits, and annual statements are a few of the documents that will require annual paperwork. Your lawyer can help make sure these documents are filed properly and on time.

Expanding Your Business Internationally

There’s a big world out there with lots of potential customers. However, expanding your business outside of the U.S. will require lots of due diligence.

It’s critical that you have a lawyer who understands industry and country-specific regulations so that you can fully comply with them. This is especially true if you plan to do business online and overseas.

Conclusion

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Hiring an attorney to help you start your business is generally a wise thing to do.

Your attorney can register your business and act as your registered agent to make sure all official government and regulatory correspondence is taken care of on time. Your attorney can draft important legal documents like an Operating Agreement, and give you guidance on how best to structure your business and limit your liability.

Finally, a lawyer can help you mitigate your liability in the event of a suit, and can provide guidance for how you can avoid costly future legal battles.

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