Many people choose to go into business for themselves. Sometimes it is because of a lifelong passion. You may be motivated by the prospect of helping build or renew your local community. You may be interested in starting a business that allows for a flexible schedule. You may have an entrepreneurial spirit. Whatever your reasoning, starting and growing a small business can be challenging without the best small business legal advice.
Our small business lawyers at The Law Group of Northwest Arkansas LLP have years of experience helping entrepreneurs get their ideas off the ground as well as protect and grow those ideas into profitable operations. To learn more about how we can help with your small business needs, from entity formation to contract negotiations, contact us through our online form or call (479) 316-3760 to schedule your initial consultation.
Do You Need a Small Business Lawyer?
When you are just starting out, hiring a business lawyer for a small business can seem like an unnecessary expense. We understand your initial budget may be based on your own savings. You may be relying on loans from friends and family. You need to make every dollar stretch as far as it can.Your tight budget can tempt you to hold off on retaining an attorney. We recommend you do the opposite. Call a local business attorney for help in setting up your business the right way and avoiding costly problems in the future.
Our team at The Law Group of Northwest Arkansas LLP can help you with:
- Legal Entity Choice
- Entity Formation and Filings
- General Legal Advice for Business Owners
- Contract Review and Negotiations
- Employment Matters
- Reviewing and Drafting Business Policies and Procedures
- Commercial Lease Review and Negotiations
- Mergers & Acquisitions for Buyers and Sellers
- Compliance with Local, State, and Federal Laws and Regulations
- Filing and Monitoring Trademarks
Call a Lawyer to Help Start a Small Business
When you are interested in forming a small business or a startup, we recommend you consult with an experienced local small business lawyer.
Small Business v. Startup
Whether your idea is for a small business or a startup depends on your goal. Small businesses tend to have long-term goals within an existing market. If you wish to form a business similar to one that already exists, and you hope to grow and maintain it over a long period of time, then this is a traditional small business.
A startup is meant to disrupt an existing market, become profitable quickly, scale quickly, and in many cases, be bought by a larger existing company. If you think you have the next big idea in tech or another industry, talk with our small business startup lawyers about how to navigate this journey.
Whether your idea is for a startup or a more traditional small business, you will benefit from an attorney’s advice regarding legal entities and formation. Often forming the right type of entity is critical to growth and profit.
We will discuss with you the type of service or product you plan to offer for sale and the liability protection you may need. All of these are factors in determining which entity will be right for you and your family.
Legal entities available in Arkansas include:
You may be able to offer a service or product for sale without forming a legal entity and filing any paperwork with the state. This is known as a sole proprietorship. All of your business revenue and debts are considered your personal income and debts. You are legally liable for anything that goes wrong with the business.
Corporations are the most formal legal entity. Owners are known as shareholders or stockholders. Corporations have a Board of Directors, which do not make day-to-day decisions but make major decisions and steer the direction of the company. Corporations have strict compliance requirements you must adhere to annually. Corporations must draft and abide by bylaws, which establish the business’s internal operating procedures.
The C Corp is the standard or default corporation. The corporation’s profits are taxed as a separate legal entity. When profits are paid to shareholders as dividends, they are then taxed again as the shareholders’ income. This is referred to as double taxation.
Double taxation may be avoided by forming a different type of entity or filing an S election with the IRS. S-Corps do not pay income taxes as a business. Instead, the income flows to the shareholders who are taxed as partners. Talk with our local small business attorneys to help draft and file formation documents for your S-Corp.
You can form a general partnership with another person. This is similar to a sole proprietorship in that the business’s revenue becomes the partners’ incomes, and the partners are liable for the business’s debts. There is no protection against liability.
In a limited partnership. there is a difference between general and limited partners. General partners are liable for the business’s debts while limited partners are only liable up to the amount they invested. General partners also have control of the day-to-day operations.
Limited liability partnerships (LLPs) provide the partners with some protection from liability. Limited Liability Limited Partnerships (LLLPs) protect the general partners from liability. This type of entity is usually formed by professions with a great deal of risk, such as doctor’s offices.
Partnerships are pass-through entities. Any money earned is divided between the partners and taxed as their personal income.
Limited Liability Companies
LLCs combine the advantages of partnerships with some of the protections of corporations. Members of LLCs are protected from liability when there is a legal claim against the company. This type of entity is often considered more flexible than a corporation because you have more options on how to structure the business. Single-member LLCs can be pass-through entities, meaning the income goes to the members and is taxed as their income.
A group of individuals or legal entities can form a cooperative to pursue a specific, mutually beneficial purpose. Arkansas law allows for cooperative corporations for the purpose of agriculture, dairy, mercantile, banking, mining, manufacturing, or mechanical businesses. Members of a coop are generally protected from liability in regard to the business’s debts. Like a corporation, a coop distributes profits through a dividend.
We are experienced small business contract lawyers who handle a variety of contract matters for local businesses throughout Northwest Arkansas, including reviewing already drafted agreements, drafting contracts, negotiating provisions, and handling breach of contract claims.
We are here to help you with executive and employment contracts, independent contractor agreements, business-to-business contracts, commercial leases, purchase or sale contracts, and any other agreements you may find necessary to the success of your venture.
We will candidly discuss with you what you want from your relationship with the other party. We discuss your needs as well as legal or practical limitations. We are then in a position to draft or review the suggested agreement and, when necessary, enter into negotiations.
Our team is experienced in pursuing the best possible terms for our small business clients. We also ensure every contract is drafted in a clear and straightforward manner to reduce the risk of misunderstandings or future breaches. If an issue arises, we are here to enforce the contract or help you leave the relationship with minimal repercussions.
As a small business, you may plan to be the boss and only employee for a period of time—or forever. But most small businesses grow and need a few employees to continue to expand and prosper. If you are coming to the point where you need to hire one or more part- or full-time employees, call our local business lawyers right away. Many state and federal laws apply to employment, and you need to comply with the rules to avoid any misunderstandings, disagreements, or legal claims.
Issues our small business law attorneys can help with include:
The interviewing and hiring process: You need to ensure your recruiting, interviewing, and hiring processes do not violate any anti-discrimination or employment eligibility laws. The process needs to be fair and objective. Further, having accurately worded job descriptions prior to advertising and hiring can save employers significant money and heartache down the road when employment issues may arise.
An employee handbook: As soon as you are ready to hire an employee or a few, you need to put formal processes into place, including a code of conduct, dress code, attendance, sick, and vacation day policies, anti-discrimination and anti-harassment policies and more. There are premade handbooks out there, but we highly recommend working with our small business lawyers to create one tailored to your circumstances and to comply with the local, state, and federal regulations that apply to your particular business.
Discrimination and harassment: You want to protect your employees and yourself. Let us explain the state and federal anti-discrimination and harassment laws that apply to you. We also will guide you in how to comply with these laws and handle any situation in which another employee is accused of harassing or discriminating against another.
Wages and overtime: It is of the utmost importance that you pay your employees correctly. You need to know how to calculate your employees’ time and wages if they are hourly. If you intend to pay a salary, you need to know what that salary includes and what can or cannot be deducted from it. You also must be aware of if your employees are entitled to rest and meal breaks and overtime pay. The exemption rules for overtime pay are regularly revised, and our employment attorneys stay on top of these changes and the current regulations.Employees v. independent contractors: Some small businesses try to call everyone an independent contractor to avoid paying certain taxes and insurance. You must be careful in making this distinction properly. Calling someone an independent contractor when they are actually an employee could lead to a legal claim against you. Our experienced employment attorneys can help you determine if an individual is actually an employee or an independent contractor, and help you draft the appropriate documentation regarding their work status.
Terminations: Arkansas is an at-will employment state, which means you can terminate an employee for any reason other than one that is illegal or breaches a contract. However, it is best to have procedures in place for how and when you will terminate an employee, and we can help you create those for the employee handbook.
There may come a time when you need an office or storefront for your business. Commercial leases can be confusing, complicated, and lengthy. Many people do not realize that what appear to be ‘boilerplate’ clauses can in fact be negotiated and tailored to ensure that your best interests are maintained. We recommend you talk with a lawyer for small business owners about the lease before signing. We can help you negotiate the lease and gain the best possible terms for your small business and to understand your rights and responsibilities as a business tenant.
We also suggest you give us a call right away if you believe the property owner has violated one or more provisions of the commercial lease.
Mergers & Acquisitions
You may reach a point where it is time to sell your small business. Or, you may be interested in acquiring a small business to expand your own. Buying another business can help you expand into a new market or gain additional equipment, inventory, and employees.
You should retain a small business acquisition lawyer from The Law Group of Northwest Arkansas LLP to negotiate the sale, merger, or acquisition. We are highly experienced in navigating the M&A process, including assisting with the due diligence process, negotiating the many complex provisions within these agreements and getting you the best possible outcome, as well as assisting with the closing and post-closing matters.
As a small business owner, it is imperative that you are aware of any local, state, and federal laws and regulations that apply to you. These laws and regulations may pertain to hiring, retaining, or terminating employees, land use and zoning, product safety, and personal service liability. You need a thorough understanding of the legal landscape and knowledge of how to avoid a violation with a regulatory agency, like the Equal Employment Opportunity Commission (EEOC).
Call The Law Group of Northwest Arkansas LLP Today
Starting and growing a small business is no simple feat. It takes motivation, tenacity, and a clear understanding of your strengths and weaknesses as an owner and employer. As one person, you cannot know and do everything. You will need help along the way. Our small business lawyers are here to offer advice and help you with legal and practical small business matters. To schedule a consultation with a small business lawyer, call (479) 316-3760 or use our online contact form.