Three Legal Areas Where a Small Business Should Seek an Attorney
A business attorney is a resource that business owners should have in their portfolio of business advisors for consultation on a variety of issues. If you’re a small business owner, you may need a business attorney at certain times more than others; however, you should always have an attorney at your fingertips. Here are three areas where an attorney can help:
Intellectual Property Law
Understanding how to protect a company’s unique patents, trademarks, domain names, and other intellectual property is essential knowledge for every in-house lawyer. The company’s legal counsel should encourage the company to protect its IP rights by filing applications with the U.S. Patent and Trademark Office (USPTO). Before discussing an invention or novel idea with other another party, the company’s legal counsel should make sure the other party has signed a nondisclosure agreement (NDA). This can help avoid legal disputes down the road.
Most patents are utility patents, meaning that they protect the functional attributes of a device. A patent application can be filed with the USPTO within the first 12 months of offering the invention for sale or disclosing it publicly.
Employment Matters Law
Employment lawsuits are bound to arise at some point in the life cycle of a company. These conflicts often arise after an employee is fired or when there is ongoing discontent in the workplace environment.
In-house lawyers should understand the basics of employment law including at-will employee, severance terms, and the distinction between “consultants” and “employees.” It is also important to keep in mind both federal and state level employment laws. There is notable variation in the employment laws across states.
Different Types of Corporate Structures
Tax considerations are often a key underlying factor behind decisions to use a particular corporate entity structure. Three types of corporate structures are particularly important to keep in mind—C Corps, S Corps, and LLCs.
The C Corp structure results in double taxation. Meanwhile, the S Corp offers greater tax benefits and the flexibility of a partnership while retaining the liability protection of a C Corp. However, the C Corp is the preferred structure for a startup to raise venture capital funding. This is because the C Corp structure permits multiple classes of stock, whereas the S Corp only allows a single class of stock.
A limited liability company, or LLC, has similar legal characteristics to an S Corp. However, LLCs use membership units instead of stock options. This can create complications for granting equity awards to employees. The LLC structure is optimal for companies with a small number of owners. Using a corporate entity makes it easier to grant stock options to a larger pool of individuals.