WHY YOU NEED TO CONSULT AN ATTORNEY BEFORE FORMING YOUR SMALL BUSINESS
February 2, 2022
One positive to come out of the COVID-19 pandemic has been an explosion in the number of entrepreneurs starting their own small businesses. Many did it out of necessity after losing their job, but many others saw the pandemic as a wake-up call to follow their dreams. Whatever the motivation, a record 5.4 million new business applications were filed in the United States in 2021.
The internet has made innumerable things possible, including completing the paperwork to start your own business. But, as with many do-it-yourself opportunities, there is risk involved that most often makes it wise to work with a professional to ensure your new venture is properly set up.
With that in mind, here are the top three reasons to consider hiring an attorney to assist with your business formation:
1. Determining what form your new business should take.
You may assume forming a Limited Liability Corporation (LLC) is the best way to go when launching your business. In the end it may be, but it certainly isn’t the only option. We work with our small business clients, in the United States and Canada to weigh all of their options and walk them through the various entity formations to transact business in the United States. We assess whether an LLC, a corporation, general partnership or perhaps a sole proprietorship is best for their unique situation. The formation is the foundation for your business –you want to make sure you build it right to ensure the long-terms stability of the business. LLC’s for Americans offer a lot of possibilities since LLC’s can be treated, for income tax purposes, as C corporation, a S corporation or a pass through general partnership. For our Canadian client, however, a US based LLC is not the entity of choice because the Canadian Revenue Agency treats all US based LLC’s as a C corporation for income tax purposes
2. Drafting a bulletproof operating agreement.
Too often we get the call when a business partnership is dissolving. We work with clients to navigate and negotiate the smoothest business divorce possible. In these matters, one thing that often proves to be a thorn in the process, is a weak or generic off the shelf operating agreement forged at the outset. When a business is launching, it is all optimism and no thought to what if this ends badly someday. When that day comes, too many business owners are left unprotected because they didn’t have everything clearly spelled out in their initial operating agreement. We are happy to help clients navigate a business divorce, but we much prefer to help them prevent an unnecessarily messy breakup.
3. Navigating the minefield of legal requirements.
Being a small business owner is one of the toughest jobs there is, and at no time is it more challenging then when you are trying to get the business off the ground. You have 1,001 items on your to-do list, and with the myriad items tied to forming a business entity, it just makes sense to outsource that work to an attorney who is skilled and adept at the process. Let our team focus on the proper formation of your new business so you can focus on making sure that business is built to succeed.
From researching your proposed name to ensure it is legal and valid, to filing all of the documents, including the Certificate of Incorporation, our team handles every step on the process. We will make sure your formation meets all publication requirements, all filing fees are paid, and you have an operating agreement in place that protects your interests.
If you are planning to launch your own business, or if you are a new business owner that did it yourself and would like us to review your formation, give me a call. Our team of business attorneys are here to answer your questions and help you turn your dream into a successful business.
Call me anytime, 716-854-4300 ext. 216 or email me at [email protected]
