What to Ask: Incorporation and Startup Tips | Cristen Freeman, Esq.
Starting a new business? UpCounsel attorney Cristen Freeman explains what every startup should be asking their legal team about incorporation and startup tips3 min read
What form should I choose for my business?
There are important tax and liability issues involved in whether a business is an LLC, an S-Corporation, a partnership or other form. Always consult with an attorney and a CPA regarding how this would affect your business.
Is it ok to utilize Independent Contractors or must everyone who performs work for me be an Employee?
There are rules that vary from state to state regarding what is technically an Independent Contractor and what is an Employee. There are also important distinctions in what types of positions are permitted to fall within these categories. If someone is an Employee there are several responsibilities for an employer that could include payroll taxes, workers compensation and other expenses.
What types of agreements must be in writing?
This varies from state to state. Some states require any agreement with a value of more than $500 to be in writing to be enforceable. Remember that whatever you do not have in writing may end up 'he said, she said' if there is a dispute over the terms of that agreement.
What types of licenses/permits must I have for my business?
This can vary greatly depending on your location. Many municipalities and states require occupancy licenses, some may require health inspections and some may require environmental or other inspections and certificates. Be sure to always check with your local government body on what type of licenses/permits are required for your particular type of business.
What ongoing fees will my business be responsible for paying?
There are a multitude of fees, taxes and other expenses a business will owe to the local, state and perhaps even federal government. These can be for required permits applicable for your business, certain types of taxes that are only applicable to businesses, or even building association fees for your office location.
What is the best way a small business owner can protect personal wealth and assets from business risks?
Forming some type of corporate structure such as an LLC, an S-Corporation or other entity and keeping business and personal assets and revenue separate at all times.
What is the best way a small business can maximize its tax deductions? (Optional)
Keep receipts of all expenses and stay informed on various credits and deductions available to you.
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?
Laws applicable to them specifically
What is the top reason people contact you for your services?
General business needs
How can quality legal services help a small business grow?
By advising businesses on how to save money that can be invested to expand the business
How can quality legal services help small businesses save money?
By ensuring businesses are apprised of all of its legal obligations to avoid future fines and fees
How can small businesses maximize the value of their legal team’s services?
Have periodic "lunch and learn" days to ensure key personnel are apprised of the latest legal developments affecting the business
Should business partners have the same amount of equity in a company? Why or why not?
It depends on the business in question, each partners time and monetary contribution and many other factors
What are the top three things a small business owner should be aware of when purchasing an existing business?
Accurately determine the value, How long have the employees been there? Are there any key employees who would be hard to replace?, Find out if there are any human resources issues or outstanding lawsuits pending against the company.