Venturing out on your own. Being your own boss. Doing what you love. Making all the important decisions. Calling the shots.
You have finally decided to start your own business. This is an exciting time for you, but it doesn’t come without stress and frustrations. It seems like every time you turn around, there is some kind of law or regulation or code that has to be put into place.
Being the boss has its definite perks, but there can be a lot to juggle, and you’re probably finding yourself wearing many hats. Having professional legal advice can make this new adventure a much smoother ride – they’ll take on the contracts, help with zoning laws, and all the other legal jargon you might be stumbling over.
Your Business Should Have Hired a Lawyer… Yesterday
There are many facets of the law that have to be adhered to when you’re starting a business. Instead of taking on all the tasks yourself, hiring an experienced business lawyer can help ease your stress and make it a much more enjoyable (and exciting!) journey. A lawyer can help you understand some of the complex processes that go into starting a business.
Some of the most important things about starting a business can also be the most complicated. Let’s take a look at some of those areas that experienced business lawyers can help you manage.
Legal Structures for Businesses
One of the first things you’ll need to do when creating your business is deciding what kind of business structure is best for you. There are many kinds of entities and knowing the differences between them will help your business plan and help you know what kind of legal requirements you’ll need to follow.
- Sole Proprietorship
- Limited Liability Companies (LLC)
Having an attorney that can help you determine which is best for your business will help you in the long run to avoid any legal issues you may run into.
Establishing a sole proprietorship is the easiest kind of business to organize. All you would need to do is apply for the required licenses in your jurisdiction and off you go! This can be set up using your personal social security number, so setting up a federal identification number is unnecessary.
Although this is the easiest, there are some downsides, too. Because you would attach a company tax form to your own annual tax return, you would be 100% liable for the company’s debts and financial obligations (including taxes, loans, and even lawsuits). Having professional legal advice would definitely be in your best interest if you were to have a sole-proprietorship.
Creating a partnership is relatively easy. But again, there is no liability protection, so you (and your other partners) would be completely liable for the business’s finances. You should have a partnership agreement.
This can get complicated from a tax perspective, because one partner may get stuck with all the financial obligations at the end of the day. This could potentially cause problems down the road.
An attorney would be able to help you establish the rights and expectations between partners upfront in case there are any disagreements down the road.
Limited Liability Company (LLC)
Forming an LLC provides just what is says, limited liability protection. It’s a hybrid organization, so it’s taxed like a partnership, yet more flexible than a corporation.
If you are planning to seek outside funding, an LLC would be your best choice. However, there are legal suggestions that if you are expecting to receive substantial outside funding, you switch from an LLC to a Corporation right before the funding comes in.
An attorney would be able to assist in helping you create this organization, as well as switching over to a corporation.
Setting up a corporation can protect the founder against the company’s liabilities. An attorney would be able to assist in setting up separate bank accounts, creating a board of directors, and knowing your legal obligations versus what the company is responsible for.
Like any business structure, there are limitations to a corporation, but there are options that will make managing your business a bit more flexible.
Each county has its own laws regarding zoning and what kind of businesses can be operated due to code enforcement. Hiring an attorney that is familiar with Baltimore County zoning laws can help you know what kind of permits are required and what you need to do in order to get those permits.
Be sure to check out your county website for the most updated information about zoning laws and regulations, so you can talk with your lawyer.
Hiring an attorney and an accountant to help sort out your business taxes can lift a huge burden off your shoulders. Depending on what kind of legal structure you have organized, you can be taxed differently.
The IRS has helpful guides that can walk you through what kind of taxes you may need to file, but having an experienced lawyer and accountant look over the details and regulations of your tax forms can be helpful.
You will most likely need to file income taxes, self-employment taxes, employment taxes (if you have employees), and excise taxes. However, knowing which kinds of taxes and what documents you need for each tax filing can get confusing. Your attorney and accountant can help.
Every business venture has a series of contracts that keep them legally sound, and creating those can be a daunting task. You will need contracts for your employees, contractors, suppliers, and even licensing agreements. An attorney will be able to draft these business contracts, as well as help negotiate terms of services.
Writing these contracts can be overwhelming, but an attorney that has experience with creating business contracts will be of the utmost help. Here are a few of the most common business contracts you will generally encounter when starting a business.
When entering into relationships with vendors and clients, a non-disclosure agreement can help protect your confidential information and give you the legal support you need in case the other party discloses it.
This is a contract between you and your employee setting the terms of employment. This will contain all crucial information about compensation, causes for termination, and even vacation time. Upon signing this document, you and your employee will have a foundation to base their performance in their job. This will also allow you to note anything specific about your company’s structure, including holiday pay, personal time off, and how you handle disagreements in the office place.
If your company is creating a product, a licensing agreement will allow you to make money on your invention. You can outline terms like payment and restrictions on reproduction. You can also license intellectual property you’ve created.
Power of Attorney
This can be a very helpful document in the event if something were to happen to you as the business owner. A power of attorney will let a person make legal and financial decisions on behalf of someone else. You can even designate your attorney as the power of attorney of your business to manage important matters if you require assistance.
These are only a few of the regulations and tasks that are necessary to start a business. However, they all require exact detail and having the help of a professional will let you focus on things that are really important to you! Getting your ducks all in a row before you are open for business will ensure smooth sailing and help your business thrive.
Having an experienced attorney, like Dilip Paliath, Esq., help walk you through the ins and outs of a business start-up will make things much easier, and more fun for you. Mr. Paliath is happy to advise Maryland clients on a full range of business transactions, and is even available to be an in-house attorney for smaller companies. If you want professional expertise, give him a call today and get started on making your career dreams come true.