What to Ask: Incorporation and Startup Tips | Diana L. Bartolotta, Esq.
Starting a new business? UpCounsel attorney Diana L. Bartolotta explains what every startup should be asking their legal team about incorporation and startup tips4 min read
Is my current business structure the best structure for my business?
This is important because many businesses (especially consultants) who are just starting out operate as a sole proprietor, without any shield from liability. You'll want an entity to protect you from personal liability.
What laws and regulations do I need to comply with in this type of business?
Many small business owners get started in a business without realizing that there are additional laws and regulations that are specific to that industry - such as in the case of lending money or the hiring and firing of employees. You'll want to be sure to know which laws govern your particular industry, in addition to the laws that govern all businesses.
Does my website expose me to any unnecessary risk?
What contracts should I be using in my business?
I find that start-up small businesses tend to either have no written contracts or have poorly-written contracts that have been pieced together from competitors' contracts. You will want to "own your paper," meaning that all of your contracts have been created for your particular company, with your particular business model, strengths, and weaknesses in mind. If a buyer or vendor wants to use their paper, make sure that it complies with all of the terms and conditions that you have contained in your contracts. And have your attorney review and approve everything prior to your signing.
What is the best way a small business owner can protect personal wealth and assets from business risks?
Make sure all assets are in the proper entity, and always sign as the business and not as a natural person.
How educated do you find your small business owners are on legal topics when you first meet with them?
What specifically are small business owners most confused about when you first meet with them?
Entity structure & compliance requirements
What is the top reason people contact you for your services?
Review contracts & close deals
How can quality legal services help a small business grow?
A great small business lawyer can help you shape your business in a way that complies with the law and allows for sustainable growth. When you work closely with an attorney on an ongoing basis, that attorney can help you spot issues as they come up and plan for proper growth. That attorney can also be a second set of eyes on a business deal or an informed professional, if you need a second opinion.
How can quality legal services help small businesses save money?
A General Counsel who is in-tune with your business can help you save money because proper prior planning will avoid costly mistakes down the road - e.g., shielding your assets from liability, creating a business model that meets government regulations, and/or reviewing contracts to guard you from unnecessary risk. Preventing problems on the front end always costs less - in time, money, and resources - than fighting problems on the back end.
How can small businesses maximize the value of their legal team’s services?
Educate yourself. Do your homework before you meet with your lawyer. Identify what you need help on and research that topic before you reach out to your lawyer for the first time. Identify which areas you can perform yourself and which areas you need a professional to handle. Ask questions, and ask your lawyer how to set up the business in the best possible way. For some work with your attorney, you'll want a flat-fee engagement. For other work (generally ongoing advice), you'll probably want an hourly arrangement. Work with your lawyer to scope out the services that you need and to agree on whether it will be flat-fee or hourly in nature.
Should business partners have the same amount of equity in a company? Why or why not?
No, business partners should not necessarily have the same amount of equity in a company, although they can. Each business is unique. In determining the amount of equity that is appropriate, consider each partner's contributions (financial, time, knowledge, and otherwise), as well as that partner's risk.
What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, Require the current owner to sign a “Not to Compete” contract, Find out if there are any human resources issues or outstanding lawsuits pending against the company.
Do you have any other essential legal guidance for startups that you haven't already included in this survey?
1) Educate yourself. This is your business, and you need to own it.
2) Community. Network with other business owners and even competitors in your industry. We all have something to learn from each other.
3) Be ready to pivot. The most successful businesses are the ones that can change direction when needed. Your business will NOT go exactly as planned. It will hit road bumps and the unexpected will pop up. When those things happen, the success of your business will depend on how well you can adapt to those changing conditions