Friday, November 13, 2009

Starting a Business-Issues to Consider

So, you have decided to start your own Business. My first advice would be to read The E-Myth Revisited by Michael Gerber.
Secondly, how you run your business is your business. I, as an attorney, can contribute by being part of your professional team by advising on what measures you need to take to comply with the law and also to legally protect yourself.
So, if you are confused about which business licensing department to visit first or which corporate form to select or what paperwork you need to open your bank accounts, don't worry. Most new business owners are. You just need to make sure that you either have the time to do the research and no money or that you want to do it right and hire the right professional to help you with the process.
Typical issues are:
Licensing. City, County, State licenses and registrations. Make sure to comply with the City, County or State requirements. For example, if you are going to be conducting the business in your name alone and working from home, you still need to register the business with the city and obtain license. However, if you plan to form a company, you have to also register the company with the State and file incorporation documents in addition to registering with the City. See the difference and importance!! Of course, you knew that.
Sole proprietorship vs. Corporation. So, if you have looked into what form of business you are going to conduct and if it is going to be individual name or proprietorship, then you do not have much to worry about. However, if it is going to be a corporation, you still have to decide whether it is going to be LLC or P. C. or C Corporation or S Corporation.
And different options are available to people depending upon what is their background, who else is involved and what their objectives are. For example, a doctor can have Professional Corporation (P. C.) but an Engineer cannot. Whether the corporation is going to be a C-corporation or S-corporation also needs to be decided based on the objectives of the corporation. A good CPA can help in the decision making process.
Professional Advisory Team.  Who will help you on legal matters? Legal matters can vary from simple incorporation to complex employment or corporate Governence. Who will help you with tax planning and strategy? Who will help you with Marketing? Insurance and Financial planning is a big part of running a business. So, make sure to identify your lawyer, CPA, Insurance Agent, etc. before you need them.
Here is a short list of documents which are required as well.
Governing Documents
Operating Agreements
  1. Shareholder Agreements
  2. Bylaws
  3. Buy-Sell Agreements
  4. Partnership Agreements
Employee Related:  
  1. Employee Manuals
  2. Independent Contractor Agreements
  3. Employee Agreements
  4. Confidentiality Agreements
  5. Non-Disclosure Agreements
  6. Noncompete Agreements
It's much easier and far less expensive to do things right at the start than to try to fix a mistake down the road. With all the laws and regulations out there, it's easy to make a mistake.  I have seen too many people get excited about working together and not paying attention to legal aspects and then later paying for the mistakes.
                                         More later….stay tuned!!