Five Things to Consider When Starting a Business
Poor planning is one of the primary reasons for the failure of many business startups. No matter how unique your planned business model may be, there are several important considerations you should be aware of in beginning your business venture. As a lawyer I have spent over 30 years representing businesses of all sizes, and at every stage in their lifespan. One thing I have learned for certain is that it is far less expensive to consult an attorney at the planning stage of a business, rather than being forced to consult an attorney after a problem that could have been easily avoided arises, and threatens the business. The following is a brief list of things to consider when planning a business:
1) All agreements must be in writing and signed by all parties. If you are purchasing property from someone it is important to check and make sure that you are dealing with all of the record owners of the property, and that everyone signs the deed. If there are other owners, even if you are unaware of their existence, you will not be purchasing the entire property if they do not sign the agreement. You never know when you will have to enforce a contract in the court system, so it is best practice to have all of your major contracts reviewed by an experienced business attorney before you execute a deal.
2) Avoid personal liability. Forming an LLC or a Corporation before you start conducting business is essential. If you neglect to do this, all of your personal assets are at risk if something happens to your business. Your attorney can help you decide which business entity is most appropriate for what you want to accomplish.
3) Pay those taxes. The IRS always wins. Your attorney can work with you to help minimize your tax burden, but it is essential to make sure that you pay everything you owe to the IRS. Often, a business owner can be held personally liable for the company’s failure to pay taxes.
4) Purchase insurance for losses that cannot be absorbed. Bad things happen. It is a part of life. If your business could not survive the occurrence of a negative event it is essential that it purchase insurance to protect the organization should such an event occur. Commercial General Liability Insurance is not enough. An experienced business attorney can help you decide what coverage you may need to purchase and what risks it can internalize.
5) Have key employees sign an employment agreement. Your business is only as strong as the team you build. Ensuring that your key employees are fairly compensated and adequately disincentivized from leaving your business is essential to the business venture’s long term stability. Working with your business attorney can help you draft a non-compete agreement and structure incentives in your employment contracts to assist your business in retaining its key employees.