Opening a business can be a complicated legal process. If you miss even one step or complete it incorrectly, that mistake can jeopardize the future of your business before you open the doors. While an experienced business attorney can help you navigate the process, it does not hurt to understand some common mistakes you should work to avoid.
There are plenty of things to worry about when forming your business, but if you are working with a partner, that list can grow. You need to consider what to include in a founder agreement. This document can consist of things like how to split equity, the responsibilities and roles of the founders, how founders will make decisions, and the possible salary of each founder. Not having this agreement set up from the beginning can lead to substantial legal issues later.
Coming up with the name of your company can be a long and tedious process. Besides worrying about what the name says about your business, you also need to worry about if there are any trademark or domain problems. You can do online searches on your own to see if another company is already using the name or a similar one. However, an attorney can assist in a thorough investigation to make sure nothing causes problems down the line.
Picking the right structure for you
One decision that can set your business up for success or failure is choosing the legal form to operate your business under. The different legal structures can impact things such as record keeping, liability and taxation.
Some common forms available to a startup, include:
- C Corporations
- S Corporations
- Limited Liability Company
- Partnerships
These structures all include filing documents with state authorities. One wrong move with the paperwork can delay the opening of your business. You can also convert from one form, like a sole proprietorship, to a corporation or LLC. However, that can be a lengthy and costly process, so selecting the right formation from the beginning can be crucial.
You can jeopardize the long-term success of your business with mistakes made during the formation of it. Working with a knowledgeable business attorney can help you avoid the common errors others have run into to make sure you start things off on the right foot.