Wednesday, June 9, 2010
Top 10 Reasons to Contact an Attorney Before Choosing a Business Form
Before starting a business you need to have a great idea and some money to invest in the enterprise. Will you start the business by yourself or with family members? Will there be other partners or investors who will not be involved with the management of the business? Will the new business be a sole proprietorship, partnership, corporation, or limited liability company (LLC)? It is best to consult a lawyer regarding the laws governing these different business forms, especially in areas such as personal liability for business debts, and the business's tax obligations. Call (951) 737-4040 ext. 2 or email Daniel J. Alexander II to discuss all of the following important business considerations. Investing in preventative law on the front end will save you thousands of dollars and hours of frustration.
10. Contracts. Most businesses implement contracts for space, services, and supplies. Business agreements between partners, investors, and employees are essential to forming a successful company. It is important to get it right to avoid ending up in court. I spent over twelve years litigating business disputes and hundreds of those disputes revolved around ambiguous contracts. I will make sure all your written agreements are as tight and straight forward as possible.
9. Registering, Licensing, and Permits. It is important to understand what is required of you when starting a business. For instance, some business entities must register with the state in order to be recognized; in other situations they may only be required to obtain licenses or permits. Consult Daniel J. Alexander II for more information.
8. Control. The manner in which a business is operated greatly depends on the type of business entity that is decided. Choosing the wrong entity may make you personally responsible for the wrongs of employees or partners.
7. Multi-State Business. The preconditions to forming and conducting a business entity vary by state. Be careful, as the protections you have in your home state of operations may be lost if you do business in another state.
6. Strict Conformity. It is important to note that with some business entities you must strictly conform to the state laws governing that business form or you may jeopardize losing certain benefits and protections.
5. Capital. Raising money, keeping accurate records of income and distributions, and behaving in a fiscally responsible manner are each very important to ensuring a successful business. Different business entities may have their own particular procedures for raising capital and making distributions.
4. Variety of Entities. Although there are five basic business entities, there are other alternatives within these entities that establish things like double taxation and liability for the acts of partners. The Out-House General Counsel understands all the ins and outs of business law. For more information regarding your business entity, call Daniel J. Alexander II at (951) 737-4040 ext. 2.
3. Autonomy. For many business entities, what you do not decide on will be decided for you. Most states have adopted "Uniform Laws" that fill in the gaps for business entities where their charters, by-laws, and other organizing documents are silent. You may be subject to a whole set of laws and regulations that you don't even know exist. The Out-House General Counsel knows California business state laws and regulations. To learn more about what “Uniform Laws” may affect your business, I encourage you to contact me.
2. Tax. There are a variety of business forms that provide different tax advantages and disadvantages. The only thing more crucial to a new business is cash flow and saving on taxes puts more of your business’ money to work for you. I work with several business CPA's who will ensure that you are taking full advantage of all the tax advantages available to you.
1. Liability. Different business forms provide different protections and risks to the business owner/investor. Personal liability means that your business puts everything you own at risk. Speaking with an attorney can help you to avoid this situation or minimize your risk. Knowing about your personal liability and reducing the risk that your business may devastate the economic well-being of you and your family is worth the visit to your attorney.
If you have any questions about any of the above, please do not hesitate to contact me at The Out-House General Counsel or (951) 737-4040 ext. 2.