What to Ask: Incorporation and Business Operations | Lois Li, Esq.
Starting a new business? UpCounsel attorney Lois Li explains what every startup should be asking their legal team about incorporation and business operations2 min read
What is the current and likely upcoming legislative impact on the operations of my business?
Reason: Small businesses have the benefit of being flexible. Despite not having the advantage of shaping the legislature as that of large businesses, properly examining legal trend and planning ahead strategically are actionable for small businesses' long term success.
How to maximize tax benefits and minimize tax liabilities?
Reason: Properly structuring tax maximizes business profits.
What are the essential contracts between and for owners?
Reason: Defining roles and responsibilities of every owner reduces conflicts and ensures alignment of goals.
What is each founder's exit strategy?
Reason: Having a plan in place to handle major disputes puts everyone at ease, so the founders are able to focus on the "fun" of operating a business.
What are the legal exposures for the business's expansion plan?
Reason: Making informed decisions on how and when to expand a business requires the understanding of legal exposures (import/export).
What is the best way a small business owner can protect personal wealth and assets from business risks?
Proper business structure formation, such as forming a LLC or Corp. Separation of business and personally assets.
What is the best way a small business can maximize its tax deductions? (Optional)
It is essential to first consider the best business structure and State for business formation tailored to the business model in order to maximize tax benefits and minimize tax liabilities. Second, every business owner should understand principles of tax deduction by working closely with an attorney and an accountant.
What specifically are small business owners most confused about when you first meet with them?
Tax liabilities, corporate formalities, and necessary legal documents
How can quality legal services help a small business grow?
Help a small business plan in advance and strategically lower risks and maximize business and legal benefits
How can quality legal services help small businesses save money?
Lower tax liabilities by strategically form and structure a business in the most advantageous State
How can small businesses maximize the value of their legal team’s services?
Use the legal advice to weigh out business risks vs legal risks
Should business partners have the same amount of equity in a company? Why or why not?
No, unless each business partner has the same level of contribution. The key is clear expectation of roles and responsibilities.
What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, Review the business's tax returns to determine profitability and if there is outstanding tax liability, Require the current owner to sign a “Not to Compete” contract
Do you have any other essential legal guidance for startups that you haven't already included in this survey?
An ideal legal counsel for startups needs to be able to combine business and legal expertise and provide guidance for startups in a simple and straightforward manner.