When you've made that decision to start your business, one of the most intimidating things in front of you is going to be,
What kind of documents do you need to create and how formal do those documents need to be?
About 10 years ago, I was where you are now. I didn't have anyone there to help me along. Now sure, I had a law degree, and that worked for law firms. But nowhere in there did we discuss how formalized all the other documents need to be. We understood the corporate agreements, we understood the legal work, but when starting out, what about those other things you need?
First of all, you can look at things like a business plan. How formal does your business plan need to be? That's really up to you and where you think your business is going to go. If you're going to seek outside investors, chances are those investors are going to want to see a formal business plan so they can see how they're going to get a return on their investment. If you're just planning on running the business on your own, like I've been running my law firm for 10 years, you may not even need a formal business plan, or you can just have a little sketch drawn out in a notebook or even on the back of a napkin.
Incorporating Your Business
When it comes to incorporating your business, there are more formalities that you need to make sure you take care of. For example, you can start with some basic questions like,
- What will the name of your company be?
- Where will your offices be located?
- Who are going to be the owners of your business?
- What are the owners investing in the business? Money? Time? Technology?
- How are you going to staff that business?
- Are you going to use employees or independent contractors? (a very important question you'll need to work with an accountant to figure out)
- Do you need a license to operate the business?
If you're a licensed professional like a doctor or an accountant, an engineer and architect, then you need to make sure your license is up to date with the state.
On top of the legal documents, even more important when it comes to formalities, are going to be your tax documents. Full disclaimer: I am not an accountant. What I will tell you is you need to go speak to a professional accountant who can help you with your business. Your accountant needs to make sure that everything is formalized correctly. For example, if you don't file your taxes correctly, the state may actually suspend your business for failure to pay the proper taxes. Now, on top of the taxes, there could be corporate fees and annual report fees that you have to file, each year, with your state.
So that's why it's very important to make sure you are dotting those i's and crossing those T's, working with a lawyer and an accountant can make sure that you have the right formalities for your business. You may be just with the back of the napkin at this point in your career, but down the road, at some point, you're going to need more formal documents.
If you're ready to make sure you've got all the formalities in place for your business, let's set up a Legal Strategy Session to see where you are and what are the best next steps for you and your business.