Small business owners know there is simply no way around legal paperwork. Legal documents constitute the very framework of your business, minimize your risks and help protect your interests.
You can find plenty of legal templates online, whether you’re forming an LLC, buying a business, bringing on a new partner, or hiring a new employee.
Though it may initially save time and money, the use of canned templates could expose you and your company to liability in the future.
Employment issues, intellectual property issues, corporate issues, and partnerships can get complex. In the long run, it could cost you much more than what you would invest in paying an attorney to draw up the paperwork. A change in one clause in an agreement will require additional changes elsewhere, and failure to make such changes can leave the business owner with ambiguous and/or contradictory clauses — or worse — an unenforceable agreement.
True, you or your CPA could just as easily form an LLC or a corporation on the state’s website as an attorney can. But, do you truly understand the details that are required on the form? Do you know the difference between member-managed and manager-managed, or why you may want to choose one over the other? I’ve had people come to me requesting that I fix what they have done online because they discovered their documents do not reflect what they originally intended.
The biggest issue I see arising is bylaws and operating agreements that aren’t set up correctly or not set up at all. Anything off the internet for bylaws or operating agreements is very generic and often isn’t even focused on Missouri law.
When a generic operating agreement is used, you risk unclear instructions, or it may even say something totally opposite to what was agreed to in the beginning. That is horrible because those are the situations that could actually end up in lawsuits.
Even when things are going right for your business, your operating agreement is important. If you seek a loan for business expansion and do not have your operating agreement in order, you risk being denied the bank loan. Banks look at operating agreements carefully.
The internet is a great resource, but it cannot take the place of a client-attorney relationship. An experienced attorney will understand your specific opportunities and risks and work with you to achieve your business goals.
At 417 Business & Elder Law, we listen to your business goals and provide you with the guidance to help you navigate the legal documents that reflect your specific business needs.
This article was also published in the printed version of the Volume 8 Jul-Sep 2017 Newsletter (PDF).
Please call our office at (417) 887-4170 if you have any questions about this article or would like to receive our mailed newsletter.