Having an attorney who takes care of your legal matters can shield you from risk, provide creative solutions to common problems, and help build efficiency into your business relationships. Remember, good advice from the outset helps you avoid expensive cleanups down the line.
We often see founders who have read basic blog posts online and then used things like document generators to create early documents such as founder agreements or incorporation agreements. They are understandably alluring for cash strapped founders.
However, those don’t and can’t take the place of guidance from an attorney who knows your business. How some of these decisions are made at the formation of your entity can greatly impact your company down the road.
It’s understandable that eager founders want to set up a company as quickly and efficiently as possible. But unfortunately, not understanding the long-term ramifications of the decisions made at the entity formation stage can have major long-term impacts on the company, including investment opportunities. And so, it’s wise to make sure a founder is aware of what some of those long-term consequences can be.
When to Seek Legal Advice
We recommend founders reach out to an attorney as early as possible, at least for high level understanding of compliance issues. Remember, doing things properly the first time is often always cheaper than cleaning up messes later.
Even if you’re very cash strapped, Even if you’re very cash strapped, investing in just an hour or two hours of an attorney’s time will give you an idea of the longer term ramifications of these decisions.
Events Where You Should ABSOLUTELY Reach Out to an Attorney
These events usually center around bringing other people into your business or major financial milestones. Oftentimes, that’s where the risk starts to mount.
At the very least, seek high level advice:
- Before you create a corporate entity
- Anytime you’re planning to do anything with equity
- When you start to take money from customers
- Anytime you start to collect, use, or store personal information about any individual
- If an investor comes to you with an offer
- Anything employee-related (hiring, firing, etc.)
If you want to learn more why it’s vital to invest in legal, check out https://cgl-llp.com/podcasts/cgl023.
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