Do I Need a Lawyer If I Have a Business Accountant

When launching or running a business, professionals like accountants and lawyers play crucial roles in your success. But many entrepreneurs, especially small business owners and startups, often wonder: Do I need a lawyer if I already have a business accountant?

At first glance, it may seem like an accountant can handle most of what a small business needs—taxes, payroll, bookkeeping, and even some business advice. While accountants provide essential financial support, their expertise has boundaries. Legal matters—like contracts, intellectual property, business structure, employment law, and litigation—fall squarely within a lawyer’s domain.

This article explores the distinct roles of business accountants and lawyers, where their services overlap, when one can suffice, and when having both becomes critical.

Understanding the Role of a Business Accountant

A business accountant is a financial expert whose primary role is to help manage the financial aspects of a company. Their responsibilities include:

• Bookkeeping: Recording daily financial transactions.

• Tax Planning and Filing: Preparing and filing tax returns, helping minimize tax liability.

• Financial Reporting: Creating balance sheets, income statements, and cash flow reports.

• Budgeting and Forecasting: Helping plan future financial growth and monitor budgets.

• Compliance: Ensuring the business meets financial regulations and accounting standards.

• Advising on Business Strategy: Offering financial insights that can guide strategic decisions.

Accountants are essential for maintaining the financial health of a business. However, they are not trained to deal with legal matters that can have long-term consequences for your company.

What Does a Business Lawyer Do?

A business lawyer specializes in the legal aspects of running a business. Their responsibilities often include:

• Entity Formation: Advising on and setting up the right business structure (LLC, corporation, partnership).

• Drafting and Reviewing Contracts: Ensuring contracts with vendors, clients, or employees are legally sound.

• Employment Law Compliance: Drafting employment agreements and ensuring adherence to labor laws.

• Intellectual Property Protection: Registering trademarks, copyrights, or patents.

• Handling Disputes and Litigation: Representing your business in lawsuits or legal disputes.

• Regulatory Guidance: Helping your business comply with industry-specific regulations.

While lawyers aren’t responsible for financial management, they’re crucial for protecting your business from legal risks and liabilities.

Key Differences Between a Lawyer and an Accountant

Area	Business Accountant	Business Lawyer
Focus	Financial management and compliance	Legal structure, contracts, regulations, and disputes
Primary Tools	Ledgers, financial reports, tax forms	Legal documents, contracts, court filings
Credentials	CPA (Certified Public Accountant)	JD (Juris Doctor) + Bar License
Regulatory Knowledge	Tax code, financial reporting standards	Business law, labor laws, regulatory compliance
Best Used For	Taxes, budgeting, audits	Contracts, liability issues, dispute resolution

Both professionals serve vital roles but focus on entirely different aspects of business operations.

Can an Accountant Do What a Lawyer Does?

In some areas, particularly taxes, accountants and lawyers may share overlapping knowledge. For instance, a tax attorney and a CPA might both be able to advise on tax strategy. However, accountants are not trained or licensed to provide legal counsel or represent you in legal proceedings. If they give legal advice beyond their scope, they could be held liable for unauthorized practice of law.

So, while your accountant may flag a legal issue, they can’t solve it—they can only recommend that you speak with a lawyer.

Situations Where You Definitely Need a Lawyer (Even If You Have an Accountant)

Here are key business scenarios where legal expertise is not optional:

1. Starting a BusinessChoosing the right business entity (LLC, S-corp, C-corp, partnership) has legal and tax implications. While an accountant can discuss the tax aspects, a lawyer ensures your structure protects you from personal liability and meets your industry’s legal requirements.

2. Creating or Reviewing ContractsFrom lease agreements to service contracts, a lawyer ensures that what you’re signing is legally binding and in your favor. Accountants may recognize bad financial terms, but only a lawyer can legally interpret or rewrite the contract.

3. Employee and Independent Contractor AgreementsLabor laws are complex. Misclassifying a worker can lead to fines and lawsuits. A lawyer helps you draft employment contracts, NDAs, and policies that comply with federal and state labor laws.

4. Raising Capital or Taking on InvestorsIf you’re bringing on investors or issuing stock, you’ll need a lawyer to draft term sheets, shareholder agreements, and ensure compliance with securities laws.

5. Dealing with Intellectual PropertyWhether it’s registering a trademark, copyright, or patent, or protecting your brand from infringement, legal expertise is essential.

6. Facing a Lawsuit or Legal DisputeIf your business is being sued or you need to take legal action against someone else, only a lawyer can represent you in court.

7. Mergers, Acquisitions, or Selling the BusinessThese complex transactions require legal due diligence, contracts, and negotiations that an accountant alone cannot handle.

Can You Have Just One Professional?

It’s possible to operate with just a business accountant for routine operations, especially if you’re a small business with minimal legal exposure. For instance:

• A solo freelancer with no employees may not need a full-time lawyer.

• A local retail store may rely on an accountant for day-to-day finances and hire a lawyer only when issues arise.

However, growing businesses, those in regulated industries (like healthcare or finance), or any company dealing with employees, intellectual property, or contracts should consider both professionals as essential.

How Accountants and Lawyers Work Together

The best-case scenario is when your accountant and lawyer work together. Their collaboration leads to well-rounded advice that protects both your financial interests and legal standing.

For example:

• When forming a business, your lawyer and accountant can together determine the best entity from both a legal and tax perspective.

• During tax audits, your accountant can handle the numbers, while your lawyer ensures you’re legally protected.

• If you’re selling your company, your accountant can help with valuation and financials, while your lawyer manages the contract and negotiation process.

This team approach minimizes risks and ensures your business is fully protected.

Tips for Choosing the Right Professionals

Whether you’re hiring a lawyer, accountant, or both, keep the following in mind:

1. Check Their Credentials and ExperienceEnsure they are licensed and have experience in business law or accounting, especially in your industry.

2. Ask About CollaborationAsk if they’ve worked alongside other professionals before—this can make joint efforts smoother.

3. Look for SpecializationsA general lawyer might not understand intellectual property, and a regular accountant may not be a tax strategist. Seek those with specific strengths relevant to your business.

4. Clarify Billing StructuresSome professionals bill hourly, others offer flat fees or monthly retainers. Be clear about your budget and needs.

The Bottom Line: Do You Need a Lawyer if You Have a Business Accountant?

Yes—having a business accountant is invaluable, but it doesn’t replace the need for a business lawyer.

Your accountant handles the money. Your lawyer handles the law. These are two different realms, and while they occasionally overlap, neither can fully substitute for the other.

The smart move? Think of them as a team—each covering critical aspects of your business’s foundation and growth. With both professionals in your corner, you're better equipped to make strategic decisions, avoid costly mistakes, and protect everything you’re building.

FAQs

1. Can a CPA represent me in court during a tax dispute?A CPA can represent you before the IRS, but if the case goes to court, you’ll need a tax attorney.

2. Do lawyers file taxes?No, most lawyers don’t handle tax preparation. A tax attorney might help with legal tax issues, but filing is typically handled by an accountant or tax preparer.

3. Is it expensive to hire both?Not necessarily. You don’t always need both professionals full-time. Many small businesses work with accountants regularly and consult lawyers as needed.

4. Should I hire a lawyer when writing contracts myself?

Yes. Even if you use templates, a lawyer should review them to ensure they’re enforceable and tailored to your specific business needs.