If you want to start a business, there are steps to take before you open your doors. You must ask yourself questions related to your vision and business goals, but you must also consider more detailed legal considerations.
A business formation attorney’s focus is knowing the right questions to ask before getting started. If you’re fired up about starting your business, a business formation attorney will have you up and running in no time with the vision and practical steps you need to succeed.
Building a Strong Foundation
The best time to start with an attorney is before your business is already established. Your foundational documents set the legal basis for your business. If you don’t want to face trouble with taxes, governmental regulations, and unexpected lawsuits, contacting and retaining an attorney to begin with is smart.
Business formation attorneys stay up to date with policies in your city and state. They can help you understand the legal climate, including which permits and licenses you may need before opening your doors. Filing for an EIN and tax status is easy with the help of your attorney.
Additionally, a business attorney can help you draft contracts to use with your customers, clients, employees, and partners. If your contracts are not written clearly and don’t cover the important topics, you could face unexpected liability. Vendors, clients, and employees may take advantage of your failure to lay down expectations clearly.
Business Organizational Choices
When starting a business, you must choose an organizational structure based on your future goals and possible liabilities. Depending on the individuals involved in your new venture, you can choose from different business structures, including:
- Sole proprietorship
- Limited liability company
- Professional limited liability company
- LLC taxed federally as an S-corporation
Your business formation attorney can help you see the benefits and drawbacks of each available type of business formation. Each type of business formation has its advantages and disadvantages. Depending on your unique situation, your business could benefit from one entity more than another.
Your attorney can also help you draft and file all of the required local, state, and federal legal documents such as:
- partnership agreements
- articles of incorporation and bylaws
- articles of organization and operating agreements
Your initial decisions affect your business down the road. For example, let’s say you decide to set up a business partnership with a good friend. You both agree that an attorney is unnecessary, so you file all your paperwork with the state and the federal government. Two years down the road, an angry employee sues your business for wrongful termination and blames you. You go to court and the former employee is awarded $100,000 in damages. Your business goes under and you are personally liable for the judgment.
However, if you discuss your structure with your attorney before starting a business, an entirely different scenario could play out. Perhaps your attorney would recommend setting up as an LLC instead of a partnership to avoid personal liability in case someone sues your organization. In this case, when the angry employee sues, your personal assets are safe.
Additionally, your attorney may recommend other helpful ideas to promote tax savings. If you set up as an LLC, your attorney may recommend that you file as an LLC with the state of North Carolina but as an S-Corporation at the federal taxation level.
Legal experience in business formation can save you thousands in taxes for every year you are in business.
Show Me the Money
Your business formation attorney acts as a knowledgeable and experienced team member by explaining start-up cost issues relevant to each business organization type. You’ll know what to expect for your first year in business and how to stay ahead of future taxation issues. Additionally, your attorney can help you stay ahead of the business climate in your locale.
An experienced business formation attorney may also help you find the funding you need to get off the ground. They understand the reliable methods for raising capital, getting financial backing, and structuring your business to make it attractive to investors.
We Can Help
At Hill Law, we specialize in building businesses from the ground up with careful attention to your formation documents and organizational structure, taxation issues, raising capital, limiting your liability, and staying on top of needed permits and licenses. We work as a member of your team to keep you on top of your legal obligations so that you can focus on your day-to-day business operations. Freeing you to focus on meaningful relationships with clients, vendors, partners, investors, and employees is one way we add value to your organization. Contact us today and find out how we can help your business thrive.