Before you quit your job and start your own IT consulting business, it might make sense to talk to a lawyer. You don't want legal issues to trip you up before you even land your first client, right?
If you don't have a lawyer, Entrepreneur offers recommendations on finding the right one. Once you find the right person, ask your new lawyer these questions before you open your IT consulting company.
1. What Do I Need to Know before Signing a Commercial Lease?
Renting an office space for your new company can be exciting. But
attorney and founder of
Law Office of Andrew Ross
, cautions that you should ask your attorney to review the lease before you sign on the dotted line.
"Leases are documents that are primarily for the benefit of the landlord," says Ross. "Even a small lease can involve many provisions which will adversely affect the tenant. But if they are reviewed by an experienced lawyer, these can often be negotiated to better protect the tenant."
Ross says some of these provisions include:
- The terms of the lease.
- The ability to get out of the lease early if necessary.
- Whether or not your business has to assume personal responsibility for the lease.
Your lawyer's guidance here may save you grief down the road if things don't work out with your space.
2. I Work at a Coworking Space – What Legal Concerns Should I Be Aware Of?
Many IT consultants aren't ready for a full-blown office but also don't want to toil away home alone. The solution? Operating out of a coworking space, surrounded by other entrepreneurs. While this is a cost-saving option for many new business owners, Ross says IT consultants should discuss potential legal issues with their lawyer before embracing the coworking life.
"The most significant issue in my view is the issue of confidentiality," says Ross. "For example, [consultants] may have signed confidentiality agreements. If that's the case, they shouldn't discuss confidential matters on their cell phone in public spaces within shared work environments. They should have all such conversations in a separate, private area."
Ross also suggests that IT consultants working in shared office spaces keep any documents in a secured, locked place where a third party can't access them.
"These are all things we would take for granted if the [consultant] has their own office, but are often overlooked by people in a shared workspace environment," says Ross.
Another thing often overlooked? Insurance. Your own property likely won't be covered by the coworking space's insurance. IT consultants will likely want Commercial Property Insurance to protect their business property and General Liability Insurance to cover third-party bodily injuries or property damage.
3. What Do I Need to Know When Hiring Employees?
Ross suggests establishing general hiring procedures to follow before hiring your first employee. For small companies just starting out, Ross says taking an "off-the-shelf" approach to hiring is normally fine. However, as your business grows, you may need to create more extensive hiring policies to ensure you steer clear of lawsuits.
"Understand what questions can or cannot be asked and what can be said," says Ross. "You can end up in a discrimination claim over hiring an employee. That's because in some cases, restrictions apply. For instance, in some jurisdictions, you cannot ask whether a candidate has been convicted of a crime, depending on the nature of the job."
If you do mess up, Employment Practices Liability Insurance (EPLI) can help pay for legal expenses if an employee sues your business over…
- Wrongful termination.
Depending on what state your business is based in, you may also need to purchase Workers' Compensation Insurance once you hire employees. It helps pay for occupational injury expenses.
15 More Questions to Ask Your Lawyer
Obviously there are loads more questions you should cover with your lawyer before you start IT consulting. We asked
Cynthia Augello, a
partner in the commercial litigation department of
Cullen and Dykman,
to give us a quick rundown of some other important questions to ask, depending on your business's needs. These include:
- How do I obtain financing for my new business?
- Do I need to trademark the name of my company?
- What type of business structure should I choose? Sole proprietorship? LLC? S Corp?
- What is my individual liability for financing my business?
- Do I have any personal liability if the business fails?
- How should I pay taxes as a business owner?
- How can I protect my personal assets in case the business fails or I'm sued?
- What do I need to know about preparing client contracts?
- What are the benefits of hiring independent contractors vs. employees?
- What is the legality of using background checks for basis of employment?
- What paperwork do I need a new employee to complete / receive?
- What deductions must be made from payroll?
- Who owns any intellectual property developed by employees, and do I need that stated in a contract?
- Should employees be signing non-disclosure agreements, non-competes, and non-solicitation agreements?
- Is this an at-will employment state? If not, for what reasons can I terminate an employee?
For more advice on starting your own IT consulting business, check out our eBook Making IT Profitable: A Guide for New Businesses & Freelancers.
About the Contributors
is a partner in the commercial litigation department of Cullen and Dykman
. She has represented clients of the firm in matters involving breach of contract; breach of fiduciary duty; whistleblowers; covenants not to compete; civil rights issues; sexual harassment; and discrimination based on disability, religion, race, and sex under the New York State Human Rights Law, the New York City Human Rights Law, Title VI, the Rehabilitation Act of 1973, and Title VII.
Andrew M. Ross
founded the Law Office of Andrew Ross
in October 2015, after spending his career at large corporate law firms. Andrew founded the firm in order to provide his clients with the highest quality legal services through a structure that, unlike most firms, is client-centric and enables a greater degree of client attention, responsiveness, and cost-effectiveness.