One of the most critical - and often overlooked - steps in starting a company is asking the right questions while selecting an appropriate business formation or entity structure that will keep the venture secure and allow for scalability through the future.
Many entrepreneurs start businesses based on what they know: their passions, their strengths and the ideas they know will make money. The nuts and bolts of business and business law often produce blind-spots and areas of weakness. Basing an entity selection on misinformation or something you read online can lead to significant vulnerabilities in the future and prevent your business from growing as it could otherwise.
With the help of business veterans and an attorney who understands how to lay a solid foundation for a company, you can avoid costly and time consuming pitfalls in the future.
Here are some issues that are directly affected by the formation decision that you should work with a lawyer to answer the right questions regarding:
Liability - The manner in which you form your business will dictate how much liability you are open to, both now and in the future. If legal troubles arise, a plaintiff could potentially go after you personally if you do not take the proper precautions.
Partnerships and investments - You need to consider other stakeholders in the business, both those currently active and those you'd like to bring on board later. You will need to establish an entity that will accommodate future investments and participation from other stakeholders, or potentially shareholders.
Tax issues - More than almost anything else, business formation affects the manner in which you are taxed. While you may think that a particular entity will best serve your tax interests now, as the business scales, that entity may prove to be a tax liability.
A skilled attorney can provide perspective over a greater horizon than you might have on your own. Legal counsel can walk you through every step of the formation process, offering invaluable insight that can save you over the years.
For more information about sound legal guidance in business formation, click here.