Business Formation Goes Better With An Attorney At Your Side
Starting a new business venture can be an exciting time. Regardless of the size or type of industry, choosing the right structure and setting your business up for success is crucial. By starting off on the right legal foundation, you can protect yourself from personal liability, mitigate losses and increase the opportunity for success.
If you are planning to start a new business, it is important that you consult with an experienced California business law attorney for detailed guidance. At the Law Offices of Jerry J. Goldstein, I have the experience and resources to guide and assist new entrepreneurs and local business owners in business formation legal matters. I am available to discuss your unique business goals and walk you through every stage involved in the business formation process from start to finish.
I am Jerry Goldstein, and I represent clients throughout the Coachella Valley including Palm Desert, California, as well as communities in and around Imperial, Los Angeles, Orange, Riverside, San Bernardino, and San Diego counties, among others.
What Legal Documents And Filings Are Required To Legally Form A Business Entity?
The legal documents and necessary filings will vary, depending on the nature of the entity you are establishing. California’s Secretary of State requires less documentation for a sole proprietorship than for a limited liability company or a corporation, for example.
Choosing A Business Structure
Determining how to structure your new startup venture is important and will have significant ramifications on many different areas of your business. Depending on your business goals and unique needs, here are some common business structure options available for you to choose from:
A sole proprietorship is the most basic form of business organization. The sole proprietor (business owner) is responsible for managing the business operations. They also take all profits and pay all taxes. It is important to note that both the sole proprietor’s personal and business assets will be exposed to potential liability.
A partnership is an association of two or more people having a unified goal of making profits. The partners will serve as the business’s co-owners and can be held accountable for all debts, liabilities, and actions taken by the partnership.
Limited Liability Company (LLC)
A limited liability company is a business structure that offers its owners (“members”) liability protection. The members are not personally responsible for the company’s liabilities and debts. The LLC has become the most common business structure used by new startups and small businesses in the United States in great part due to its flexible structure.
A corporation is a legal entity that provides liability protection to its directors, officers and shareholders. With limited exceptions, only the corporation will be held responsible for corporate debts, liabilities or negligence. Corporations have strict tax requirements and potentially expensive administrative costs.
What Legal Considerations Should I Address When Forming A New Business Entity?
Determining the type of business entity is a multistep process. Depending on the nature of your business and the products or services you provide, you will need to consider where you locate your business. For example, a manufacturing business will have different zoning issues than a restaurant. If you are going to form an import or export businesses, you will need to comply with federal regulations for doing so. If you need employees, how many will you hire? You will need to pay taxes, have the proper licenses and permits as well as comply with state and federal labor laws, including those involving discrimination and sexual harassment. Insurance coverage for your business operation and employees will be another consideration. Developing contracts will be critical to the life cycle of your business.
Every business has contract needs, and preparing the necessary contracts is vital. Here are some common contracts to draft for your startup business:
- General business contracts specific for your industry
- Employment agreements
- Service contracts
- Buy/sell agreements
- Employee handbooks
- LLC operating agreements
- Shareholder agreements
- Partnership agreements
- Confidentiality, nondisclosure, and non-circumvention agreements
- Noncompetition agreements
- Non-solicitation agreements
- Assignment of Inventions agreements
A knowledgeable and experienced business formation attorney can help draft or review your agreements, help you understand a contract’s contents and wording, and help reduce or prevent potential liability or disputes.
Why Are Contracts So Important?
Here are some benefits of having a properly drafted contract:
- It clarifies business agreements, relationships, and the rights and responsibilities of all parties
- It avoids possible contract disputes, litigation, or conflicts, and mitigates risks and losses
- It prevents errors or misinterpretation in both contracts and communications
- It establishes dispute resolution techniques, either through arbitration, mediation or litigation
- It increases operational efficiency and generates more revenue for the business
- It extends your brand and business values
- It protects business assets, intellectual property and real property
- It serves as a guideline to assure the parties to the contract follow the agreed to provisions.
Filing Required Taxes
Business owners in the United States are required to file taxes annually. Depending on your business structure or entity, some common federal, state, and local tax returns to file include:
- Income taxes
- Employment taxes
- Property taxes
- Sales and use taxes
- Excise taxes
- Federal, state and local income taxes
In order to file your taxes, you must first obtain your federal and state tax ID numbers.
Licenses And Permits
Licenses and permits are required to provide services, sell products or otherwise operate your business legally. Depending on your industry, you may need to obtain licenses and permits at both the state and federal levels.
The purpose of business insurance is to protect entrepreneurs, business owners and partners from the potential costs involved in operating a business. You can purchase business liability insurance coverage to protect your business from potential liability exposure including general liability, directors and officers, errors and omissions, employee disputes and similar policies of insurance. In addition, in a closely held business, the owners may want to purchase policies so-called cross-purchase life insurance policies to provide cash to enable the surviving owner to purchase the interests of the deceased owner from their family.
How Can a Business Lawyer Assist in Selecting the Right Business Structure for My New Venture?
When you engage an experienced business lawyer to assist you with selecting the right structure, your discussion will start with creating a business plan. Your lawyer will ask you to provide a complete description of what you have in mind – what it is, who it serves – and how long you wish to operate this business. How do you feel about taking responsibility for all parts of the day-to-day operation? Will your family help you? Do you want to take the business public? How do you feel about working with a board of directors? Does your vision include shareholders? What do you want to happen to your business if you are suddenly incapacitated? A business lawyer can help you explore options.
As your legal counsel, I will educate you regarding your business structure options, help draft your contracts and set your business up for success. Using my extensive experience and understanding of the law regarding business formation in California, and other states, if appropriate, I will guide you through every phase involved in forming a new business and help you make key decisions.
How Can Legal Counsel Help Ensure Compliance with State and Federal Regulations During Business Formation?
Legal counsel keeps current with legislative revisions and case law updates to federal and state business-related regulations. An experienced business lawyer will review your entity’s legal documents and help you stay on track when it comes to drafting new documents such as Articles of incorporation, bylaws, shareholder agreements and employee stock option plans, for example.
What Legal Pitfalls Should I Be Aware of During the Business Formation Process, and How Can a Lawyer Help Mitigate Them?
Business formation in California involves complicated procedures. Choosing a business entity, establishing contracts and legal documentation, filing necessary taxes, and applying for licenses and permits can make the entire process more complex and daunting. Establishing a strong legal footing for your new enterprise requires working with an experienced California business formation attorney for detailed guidance.
Work With An Experienced Attorney
If you are starting a new business, contact me at the Law Offices of Jerry J. Goldstein today. I can offer you the detailed legal counsel you need to navigate the early development stages of your business. I am committed to providing knowledgeable and comprehensive legal guidance to clients in business formation-related matters. I work with various business owners and new entrepreneurs to understand their business needs and goals. Call my office in Palm Desert at 760-359-2233 or send me an online inquiry to make arrangements for a consultation.