If you are an active entrepreneur, or you have suddenly found yourself with a product or service others want, the idea of forming your own business can be exciting and filled with optimism. Just like relationships, buildings, and families, however, there need to be strong foundations in place to sustain the needs and growth of the business. This starts with a strong team of individuals that can each help you see the little details within the big picture.
One person you should include on the team is a business formation lawyer. These individuals can help you understand the options available for forming your business and ensure that your policies, procedures, and contracts adequately protect it. These obstacles are just some of the many aspects of business formation.
Types of Businesses
Starting a business is more than coming up with a catchy title, advertising, and hoping it works out. There are several factors that you need to consider, chief among them being the type of business you are starting. This is more than identifying the product or service, but rather the legal entity you will register under.
Types of business models include:
- Corporations (S, C, Professional, Close)
- Partnership (Limited Liability, Limited, General)
- Joint Ventures
- Sole Proprietorship
- Non-Profit
- Limited Liability Company
The structure that is right for your company can be determined through four main categories. Each category has different implications for legal matters, financial decisions, and taxes:
- Control: This refers to the amount of control you want within your business. While you may assume that you want full control, because it is your business, there may be instances in which you have other partners or a desire to establish a board of directors. A sole proprietorship grants you full control and offers you the freedom to make decisions on behalf of your company. If, however, you form your business as a corporation, you may have the influence of others, including potential shareholders.
- Liability: While businesses carry insurance, employ financial and legal professionals, and put other protective measures in place, the ultimate liability for a business rests in the hands of the owner or owners of the business. This includes any debts your business accumulates, any physical liabilities, and other considerations such as legal infractions and accidents. However, there are some structures that limit the liability of the business owners. If you register as a sole proprietorship, for example, full liability falls on you, including any civil claims filed against your company. However, limited partnerships or limited liability companies reduce the risk to only what is invested in the company.
- Taxes: In some business structures, the owner is responsible for paying taxes through their personal yearly filings. This is common in sole proprietorships, partnerships, limited liability companies, and S corporations. However, other structures set up taxes to be paid and calculated through a corporate tax system.
- Administration: Administration is the day-to-day operating procedures in place to help a business continue to grow. This can include filing paperwork or updating documents. In a sole proprietorship or partnership, the administrative side is fairly simple, and there is less accountability to different entities. However, corporations may have a multitude of guidelines that they need to follow, both during the initial set-up and the day-to-day operations.
Utilizing a Business Attorney
Business attorneys can provide the legal guidance your company needs to establish growth. Specific ways a business attorney can help include:
- Structuring: Your attorney can assist you with establishing the right business structure based on the many options available. They can go through the options available and guide you through the decision to help you decide what is right for you.
- Providing Industry-Specific Advice: Each industry has its own set of rules and regulations that companies are required to know and operate under. Business attorneys can help you understand these guidelines and ensure you meet them.
- Providing Legal Oversight: This involves more than just reading contracts. By drafting and negotiating with entities that your company conducts business with, your attorney can ensure that your paperwork is correct and free from challenge. This includes registering your intellectual property, establishing employee policies and procedures, and completing business registration forms. These legal processes and more need to be done correctly, or they could delay the start and continuation of your business.
- Tax Obligations: These are always a consideration. Taxes are unavoidable and are paid by individuals and corporations. Business attorneys often have connections to tax professionals and personal finance entities that can help guide you through how tax laws work in your business.
- Knowledge: Understanding employment law is important to the success of your business. Your business must understand how California law impacts the success of your employees. The law tends to side with employees because they are integral to the success of not only your business but also your customers. California employees are a valuable asset to the economy, and the state seeks to protect that.
FAQs
Q: What Is Formation Business Law?
A: Business law is an important step in the process of establishing your own brand. Your business offers unique goods and services to the public and is therefore protected under certain laws. Business law also helps protect your employees and your success. With the right business attorney, you can have solid support for your business.
Q: What Are Common Roles a Lawyer Can Play While Forming Your Small Business?
A: Business lawyers are integral to many aspects of business law. They help establish policies and procedures that are common with California law, and they assist with contractual partnerships that help keep the business moving forward. In addition, they provide guidance to help you make the right decisions for the foundations you are trying to establish.
Q: Why Do Entrepreneurs Need a Lawyer?
A: For business law, there are many ways to shortcut the process. However, those shortcuts fail to establish the foundations needed to start and establish a business with longevity. If you are an entrepreneur seeking to build a reputation around your services or brand, speaking with an attorney can help you find clarity for your business’ mission and vision.
Q: What Is the Simplest Legal Structure for a Small Business?
A: The easiest and simplest form of starting a business is to establish a sole proprietorship. Under this model, you are at the foundation of your business’ decision-making. You are considered the lone decider, which means you can put the policies and procedures in place that you think most fit the model of California employment law.
Business Formation Lawyers in Fresno
If you want to start your own business, trust the legal experience at Fishman Larsen Callister. With our combined experience, you can have the answers to your questions that you need to start and maintain your own business. Contact our offices today.