A Hawaii lawyer can give you advice about how to start a business, whether to incorporate or form a partnership or an LLC. A lawyer can register your trade name, review your commercial lease, and prepare employment agreements for your key employees.
There are a whole host of legal issues that commonly arise when you are starting a new business or running an established business. An attorney can help you navigate the complex tax laws, contract laws and employment laws, and intellectual property laws that most certainly affect your business, whether you know about these laws or not.
Starting a Business in Hawaii
Starting a business in Hawaii can be challenging.
Do I need a lawyer?
Starting a business anywhere involves a lot of factors. People don’t usually consider a lot of these Hawaii business law factors before going into business and they can make some costly errors.
Many people believe the myth that starting a business is as simple as filling out a few forms and then getting right to work. We strongly suggest that you consider a brief consultation with a lawyer before doing anything else. Just a few words of advice at the very beginning can be invaluable and can save lots of time and expense.
Examples – Don’t Let This Happen to You
A guy wants to start a business inspecting homes that are being sold. He comes to Diehl & Weger after he has already chosen a name for his business and has begun work. Diehl & Weger spend numerous hours defending him against a claim that the name he chose is too easily confused with the name of another Hawaii business. Cost to business owner: substantial!
Two people own a condo and want to rent it out. Because they are already co-owners, they simply start renting it without any business formalities, other than a general excise tax license. Mistake! Two people in business automatically results in a partnership, but the terms of that partnership (such as who does the work and who gets the profits) were never put in writing.
Even the best of friends, or relatives, can disagree when everything is not ironed out in advance. These two owners wound up in a major dispute that was expensive to unravel, solely because they didn’t see a lawyer and have a partnership agreement drawn up beforehand.
A family company started out small, but grew and developed unique computer and website products that eventually became quite valuable. The company had written contracts with its employees, but they were outdated and didn’t protect the company’s information. The owners came to Diehl & Weger with a big problem: employees were leaving the company, going into competing businesses and using the company’s information. Because of the outdated contract, the company was forced to bring a costly lawsuit against the ex-employees to assert its legal rights.
These are not fictional examples, but the real-life stories of clients who have come to us too late in the process of beginning or running their business. Of course, we can usually fix things after the fact, but how much easier and less expensive if they had seen us earlier.
Another major example is the choice of a structure for your business. Most individuals beginning a business simply operate without any business structure set up in advance. An individual in business is automatically considered a sole proprietor, which is actually a form of business structure. Or they may have heard of the now-popular LLC, and choose this structure without any examination of other possibilities.
There are a lot of advantages and disadvantages to consider when choosing between a sole proprietorship, an LLC or even an S-corporation. Knowing the pros and cons of each is helpful, but each business is unique and it’s not easy to know which one is right for a new business. The decision has a lot to do with other factors, such as whether the owner or family members will work in the business, what the expected profits will be in the long run, and whether the owner has other outside employment.
Seeing a lawyer for a brief advance consultation on such issues is invaluable—the best insurance against future problems. And the best guarantee that the owner won’t be paying unnecessary taxes.