Before you meet with your business attorney to help you form your company, it's a good idea to spend some time thinking about a few different strategies for starting your business. Especially if you are starting a business with a partner (or partners), it's important to make sure you're all on the same page when it comes to the setup of your new company. You don't need to have all of the answers before you have a first meeting with an attorney, but it will often make things easier at that first meeting if you review some general answers your attorney will be looking for, like
- Is it your first time setting up a business?
- What type of entity are you setting up?
- Do any of the owners have a professional license?
- Do you have proposed business names?
- What state are you forming the business in?
- How will the business be owned?
Some of your answers to these questions may change after you meet with an attorney, but it's a good idea to have an idea of your answers.
First Time Setting Up A Business
If you've already set up a business before, then you likely have some experience with what it's like to work with a business attorney and how that relationship can grow and evolve over the life of your business. However, if you just used some legal forms website to set up your previous business, working with an attorney may be a new experience for you and can help alleviate some of the work that you had to go through the first time.
Type of Entity You Are Setting Up
Depending upon what state you are creating your company in, there can be a variety of different types of corporate forms you can use. Generally, some of the most common types of entities are,
- Corporation (C Corp. or S. Corp.)
- LLC (Limited Liability Company)
- General Partnership
- Limited Liability Partnership
- Family Limited Partnership
- Limited Partnership
- Business Trust
It's in this regard that the business attorney is an important part of your process. You'll also want to make sure you're working with an accountant as well as you are choosing your corporate form. Your attorney will look at the best form for you from a legal standpoint, and your accountant will look at the best form for you from an accounting standpoint. These two standpoints will normally align for you, but in case they differ, it's important that you understand why each of them is suggesting the corporate form that they are suggesting.
Does Anyone Have a License?
If you're in a line of business that requires some kind of license (a doctor, an engineer, a liquor license, etc.), it's important that you understand the requirements for business ownership as it relates to the license. For some business types, there is a requirement that the business must be owned by a certain percentage of licensed individuals. In other lines of business, you aren't able to be an owner of the business without a license. So, if there's going to be a professional license involved, make sure you understand the ownership requirements for the business.
Proposed Business Names
This is often one of the easiest parts of the meeting. You don't necessarily need an attorney to help you choose a name, but their role will be to ensure that the name you choose is available. As well as the legal component, you also want to consider the marketing implications of the business name you choose. One of the first places to go is to the internet to see if the domain name that would logically flow from your business name is available. If so, and your business name is not taken in your state, then you should be ready to get started with that name.
What State Will You Be Forming In
Entire books are written on choosing the right state for your company. You could spend the time and read them all, but by the time you're done, the opportunity to form your company may have passed you by. Instead, this is an important part of the process for your business attorney. They can help you understand which state makes the most sense for you to form your business in.
How Will The Business Be Owned
How you will own the business is another state-specific question to consider. Some common types of ownerships are,
- Individual Owners
- Other Companies (an LLC owning an interest in another LLC)
- Trusts (a great way to combine estate planning and business ownership)
Each of these types of ownership structures has their own advantages and disadvantages. It's also a another point in the process where it's good to work with your accountant to understand the tax implications to you and your family depending on the ownership structure you choose.
I've tried to simplify some of the issues as best I can, but there's no substitute to spending some time with a business attorney as you prepare to start your business. If you're ready to get started, you can set up a Legal Strategy Session and we can discuss some options for you and some next steps you can take to get your business up and running.