When you are getting your business started, there can be a lot of advice from a lot of different folks. I'm a big proponent of making sure you've got a strong TEAM (Trusted Experts, Authorities and Mentors) around you to help bounce ideas off of and keep you on the right track. One of the first decisions you may confront is whether to start as a sole proprietor or formally incorporate your business. If you have partners or have talked to your accountant or lawyer and they've recommended you incorporate, then you are probably wondering how formal your business documents need to be.
Your Business Plan
When it comes to business plans, it will all depend on how you are funding your business. If it's just you and a buddy and you are putting your own money in to get the business off the ground, then your business plan can be as informal as a sketch on the back of a napkin (I'm not recommending this route, just saying it's an option). If you are going to have outside investors, they will often want to see a more formal business plan to see where their money is going to be spent and the possibilities of a return on their investment.
Incorporating Your Business
When you've made the decision to incorporate your business, there are certain legal formalities that have to be followed. Oftentimes, my clients ask for a list of things they should be considering for the legal papers for their business. Some common questions to be prepared to answer:
- What will you name your company? (you'll need to check to make sure it's not taken yet)
- Where will your office be located? (you need to check to see if you need an office or not)
- Who are the owners of the business?
- What are the owners investing in the business? Money? Time? Technology?
- How will you staff the business (employees or independent contractors)? (a good question for your accountant)
- Do you need a license to operate the business?
There are other legal considerations as well, but this should be a good start for you to work from.
Working With Your Accountant
One area you want to make sure you aren't ignoring formalities is with your taxes. While you can do an informal business plan and do a bare minimum amount of filings to start your company, the tax authorities don't look fondly on that approach to your taxes. They want their forms filled out fully and correctly and you need to meet with your accountant to make sure you've got the right filings and tax elections. If you don't do file your taxes correctly, you can find your company suspended by the state you're in and then you've got a whole new set of legal issues to deal with.
You May Also Like
- What Are Corporate Minutes and Does my Business Need Them?
- Steps for Starting Your Business
- Sole Proprietor or Incorporate Business? Which Should I Be?
If you are thinking of starting a business, or if you've already started one and want to make sure you've got your legal documents in order, let's set up a Legal Strategy Session to review the best options for you and your business.