When starting a business, there are many common mistakes made by entrepreneurs. By recognizing these mistakes early, or by preventing them altogether, the business will have a better chance of long-term success. Below are five tips that entrepreneurs should consider when starting their new business.
# 1 – Choose the Correct Business Entity
Before you decide which entity structure is appropriate for your venture, you should meet with local attorneys that specialize in business formation. The attorney will outline the advantages and disadvantages of the different entity structures and will discuss which structure best fits your individual needs. Rather than select a business structure that you read about on the internet, you should seek the professional advice of an attorney so you are not caught off guard about potential future liability and adverse tax consequences.
# 2 – Name the Company
During your initial corporate formation meeting with an attorney, the attorney will inquire about the name of the company. After discussing potential names for your business with your network of colleagues, you should bring several ideas to the meeting. In conjunction with their business formation services, corporate attorneys will either reserve the name of entity with the Secretary of State or will file the organizational document (Articles of Incorporation or Articles of Organization) soon thereafter to secure the desired name.
# 3 – Define Business Relationships
It is crucial that everyone involved in the new business knows what is expected from them and what to expect from the company in return. Whether it is the business partners, employees, or contractors, it is important to have a written document that lays out all the details. Some of these details will be addressed in the organizational documents (Bylaws, Operating Agreement, etc.); however, additional documents, including an employee handbook, may provide optimal transparency.
# 4 – Protect the Company
If your company possesses proprietary information (software, design, etc.), it is crucial that the company protects its intellectual property with the appropriate patents, copyrights, trade secrets, confidentiality agreements, etc. Your corporate formation attorneys will be able to assist you, or put you in contact with another attorney who will be able to ensure that your business assets are properly protected. It is important to note, however, that this may not apply to all businesses.
# 5 – Have Experienced Corporate Counsel
As you can tell from the previous four steps, corporate formation attorneys play a large role in getting your business off the ground. Often times, new businesses will attempt to cut expenses and will avoid consulting with a corporate formation attorney, instead opting for an online document preparation service. As this blog as previously noted, online preparation services are short-sighted and treat your legal services as a one-size-fits-all commodity. The experienced corporate formation attorneys at The Loftin Firm, P.C. believe that each company is different and should be offered the service most appropriate for their business needs, not that of the general public. Our experience and time-tested strategies allow us to offer cost-effective solutions for our clients so they are legally protected and equipped to grow their business into the future. If you have questions about starting or operating a business, contact the corporate formation attorney at The Loftin Firm today.