tax form and glasses

The BAM Guide to Finding Good Legal and Tax Advice

Following on from our series on BAM in Hard Places, we are delving deeper into how to deal with legal and tax issues, especially in challenging or cross-cultural situations.

It is absolutely critical to get the best advice for legal and tax issues. It’s easy to get caught up in the busyness of business life and push issues of legal compliance away. However, neglect these areas at your own peril, they can bring your business down.

Why You Might Need a Lawyer or Accountant

There can be many areas of legal compliance that will require your business to seek advice from a lawyer. Different lawyers tend to specialise in different areas, so if possible find a specialist in the area of the law relevant to your need. For tax issues, you will either be engaging a tax accountant or specialist tax lawyer.

Here are some areas of doing business that may require legal advice:

Registering a Business
Advice on requirements for properly structuring and incorporating a new business. You may need a lawyer to guide through the process of registration, such as helping to put together the required documents, obtaining licenses or talking to government departments on your behalf.

Annual Reporting
Help with fulfilling obligations that companies have to submit accounts for tax purposes, or for annual company registration or reporting in the legal jurisdiction.

Developing Company Policies
Developing business policies and structures in accordance with local law, for example, employment terms or workplace safety (including fire regulations).

Reviewing Contracts
Vetting contracts, for example employment contracts, supplier contracts, property and leasing contracts, acquisitions and mergers, loans from institutions or local investments, etc.. It is especially important to get legal advice in the case of large client or supplier contracts that could make or break your business.

Civil Litigation – Settling Disputes
If there is any dispute that needs to be settled within the legal system between two or more parties, one party being the company, then you will need to engage a lawyer. This is a case of conflict that can only be resolved through the courts. You may be in a situation where either a lawsuit has been brought against you, or by you against someone else, for example, a breach of contract, employee dispute, property rights infringement, liability case, or debt litigation. Always try and resolve the issue first without recourse to the law, for example, through mediation. However, if it cannot be resolved and legal action is unavoidable then you will need a lawyer.

Criminal Litigation – Alleged Violation of Criminal Law
In any case that you are arrested or criminal proceedings are brought against you or your company, you will certainly need a lawyer!

Why You May Not Need a Lawyer

When trying to decide whether to see a lawyer, the answer is usually: don’t! Unless it is an emergency (such as a workplace accident) or where handcuffs are involved (criminal litigation), don’t rush straight to into hiring a lawyer. Even if you will eventually need a lawyer for any of the reasons given above, there is always much preparation work to do first. More advice regarding how and when to engage a lawyer is given below.

For conflict resolution, it may be possible to pursue other avenues of settlement to avoid legal action, such as mediation or arbitration. There are also many other resources available that may mean you don’t need a lawyer – or at the very least will help you prepare for a legal process – including:

  • An accountant for tax issues
  • Small Business Advice Bureau
  • Chamber of Commerce
  • Business network or professional body
  • Business consultant
  • Reports by international or industry-specific entities
  • Advisory board
  • Books or training courses
  • Other business people or BAM practitioners

Two great places to start when investigating how to set up a business in another country are the Ease of Doing Business Reports by the World Bank, and visiting a Chamber of Commerce or Business Bureau that is local to you.

When to Engage a Lawyer

The number one rule is: educate yourself as much as possible first!

For tax and accounts matters, don’t immediately hire a lawyer, but first engage a good accountant or financial advisor who can quantify and qualify what the exact issue is. Your accountant or financial advisor should have a good understanding of local tax laws and will be able to tell you whether you need to hire a lawyer or not. It may be that you need more than one advisor if you have tax liabilities in more than one country. If you only have an advisor or accountant in your home country, you will also need to engage advice locally.

Discuss your tax liabilities with this accountant or financial advisor, but go into this conversation understanding the numbers as much as possible – this is very important! Get at least some basic training in finance, the more the better, but especially around the profit and loss account and the balance sheet. If you know nothing else, know those two documents inside out – even if numbers are your weakness.

Enable or equip your accountant to advise you in regard to tax. Should you then need to hire a lawyer, it should ideally be under the accountant’s guidance, and as a last resort.

When it comes to engaging a lawyer for a particular purpose, remember that you instruct the lawyer, not the lawyer instructs you! Going in with the attitude of, “I’ll trust you because you are a lawyer” is a big mistake. You must understand the issue you are dealing with enough to intelligently instruct the lawyer and define the desired outcome that you want.

Always do as much homework as you can before you go and see a lawyer. Don’t just throw a task at at lawyer and say “whatever you recommend we will do.” Gather facts and draft agreements or contracts in your own words first then take them to a lawyer and ask him or her to confirm that all is correct according to local law. Their job is to make sure the final draft meets the legal requirements of the local jurisdiction. You must have a lawyer to do that.

Many Chambers of Commerce, Consultancies, or Business Bureaus will have ‘precedents’, that is templates for legal documents and policies that you can work from. Other business owners or BAMers may be willing for you to copy and personalise their materials. If you can find a good template to work from, fill in the blanks and use it to prepare roughly what you want ahead of time. Then you can go to your lawyer and say, “I’d like something like this, please draw it up for me so that it is legally compliant for my situation”

How to Select a Lawyer

As well as doing research on the legal issue you face, also do research on the lawyer!

Always get advice from your network first on who would be a good lawyer for your needs. Find out who in your network has used a lawyer for a similar problem and get a recommendation. If you have to go cold to a lawyer – or even when you have a recommendation – ask for references and follow them up.

You have probably heard the term Caveat Emptor, or ‘let the buyer beware’, here is another: Caveat Causidicus, beware of the lawyer! Certainly many lawyers are motivated by maximising fee income and meeting certain targets. Understanding that motivation will help you stay smart in your legal dealings.

Find out the specialisation of the lawyers you are pursuing. If you go to a lawyer that doesn’t have the specialisation you need, they may have to bring in an additional lawyer at an additional cost. Try and avoid paying multiple fees by going directly to the right kind of lawyer for the issue at hand.

When you’ve found a good lawyer, look after them! Build a relationship of trust with that person, get to know them.

Cross-cultural Dimensions

When doing business cross-culturally, it is vital as a general principle to understand cross-cultural communication issues. This is especially true when dealing with legal issues. Make sure you understand major differences in worldview and communication styles from your own home culture. Discover how these might affect workplace norms, health and safety policy, expectations of employees, and so on.

Again, going well-prepared to a lawyer is especially important in a cross-cultural situation. As well as doing all the homework outlined above, also get advice from business people more experienced than you in the local culture (locals or expats). What are the norms? What should you be expected to pay? What are the common pitfalls? If you just knock on a lawyer’s door and put yourself entirely into their hands in a different culture, you could be asking for trouble!

Stay Alert

Finally, stay alert to the temptations and consequence of sin in these areas. As the Apostle Peter cautions us:

Be alert and of sober mind. Your enemy the devil prowls around like a roaring lion looking for someone to devour. – 1 Peter 5:8 (NIV)

In our experience, there are two areas of sin that business people more easily slip into: dishonesty and sexual sin. Finance people and administrators tend to be more succeptible to dishonesty of all kinds (corruption, fraud, deception, lying etc.) because they are handling money. Sales and marketing people tend to more susceptible to sexual sin, because they are engaging in building relationships and hospitality. It is easy to give into small temptations, that lead to bigger ones, that lead to sin in these areas.

Make sure that you are not falling into the temptation of financial gain through dishonest or legally-questionable means. Don’t just engage good legal and financial advice, but also have people in your life – friends, colleagues, boards, mentors etc. – that you make yourself accountable to.

by David Skews and Jo Plummer

 

david skews profileDavid Skews, LLB is a businessperson called to mission. David obtained his law degree in 1981 and worked in the area of Health and Safety for over 20 years. In 1989, he established EDP Health Safety & Environment Consultants Ltd performing the role of CEO as he led EDP through sustained growth for over 25 years in both the UK and Asia. In 2004 he fully engaged in business as mission, as well as continuing to lead his business. Since then, David has focused his efforts into training entrepreneurs in Asia and Africa, and speaking internationally on business for good. He has also helped lead a mission agency through the process of embracing missional business. Today, he acts as a non-exec director for six successful BAM businesses and is part of the Advisory Board for BAM Global. David transitioned out of his business in 2015 and into new BAM fields! David is married to Lesley and is based in the UK.

David serves as a regular mentor for the Ask a BAM Mentor column and a member of the website Editorial Board.

Jo Plummer Jo Plummer is the Co-Chair of the BAM Global Think Tank and co-editor the Lausanne Occasional Paper on Business as Mission. She has been developing resources for BAM since 2001 and currently serves as Editor of the Business as Mission website. 

 

 

Join us on The BAM Review Blog this month as we explore the topics ‘BAM in Hard Places’ and ‘Legal and Tax Issues’. Have your say on social media on this topic by following us on Twitter or Facebook.

 

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