When you start a new business money can be in short supply, but there are important reasons to employ professionals to help you to get started on the right foot.
Here are five reasons to not to skimp on legal advice:
- Starting With The End in Mind. When multiple entrepreneurs, often times friends, come together and start a new business venture, they do so without thinking about each partner's exit strategy (e.g., retirement, buy-out, etc.). This can be disastrous to the partners both financially, and personally. A competent business lawyer can walk you through the planning process so that if an issue arises or one partner is ready to leave the business, your company’s operating agreement or buy-sell agreements provides the method in which this can occur. A clear set of rules can help mitigate disagreements and keep your relationships in tact.
- Personal Liability Protection. If you, alone or with partners, start a business without forming an organized entity (e.g., limited liability company, corporation, or limited partnership), you are operating as a sole proprietorship or general partnership. These unincorporated business entities do not provide you with any personal liability protection. This means that your personal assets may be at risk for a business debt (even those incurred without your knowledge). While there may not be anything wrong with operating as a sole proprietor, it should be a conscious decision and not an accident. By selecting the correct entity type, you can minimize your personal risk.
- Filing your paperwork with the State properly matters. Securing the business name you want statewide and making sure that your business is legally formed are good for your company brand and personal liability protection. Mistakes and omissions can come back to haunt you should issues such as liability or taxes arise.
- Tax Implications. There are a variety of tax elections that organized entities can utilize that are not available to sole proprietors. The proper tax election could mean tax benefits for you and your business partners. These options should be explored with your business attorney and a competent accountant or CPA.
- Peace of Mind. Knowing that your personal assets are protected from potential business liability is great peace of mind. Likewise, knowing your businesses structure is designed to further your goals allows you to focus on what's important to you: successfully running your business.
It is important to start a business off in the right way. Doing so minimizes the possibility you will spend exceedingly valuable time and resources later resolving issues that could have been avoided with proper planning. To schedule an appointment, contact us or call us at (512) 535-5008 for a free consultation.