4 Things to Consider When Starting a Business

Starting a business is thrilling and terrifying. If you’re like many small business owners, you might be strapped for cash and want to make sure you make the most of the funds you have. Having legal representation from the beginning can help you navigate the complex processes involved in creating a business, whether you’re solo or have partners, are using your own money, or have investors. The experienced team at RMK Law can offer advice and guidance even before you apply for a business license or sign a lease for office space.

A strong name helps your company sell products and services by encouraging brand recognition. It not only carries your company message, but it can also attract investment capital, making it a valuable asset in and of itself. Once you select a name, your RMK Law business attorney can confirm the business name is available, register with the state, and submit a trademark filing.

When your company name has a Federal trademark, it has protection against another entity using the name and allows you to file a suit for infringement. In some cases, the name may not be eligible for trademark protection unless registered with a distinctive company logo.

A lawyer can help you avoid costly missteps from the moment you decide to be your own boss, starting with which business entity is right for you. Sole proprietorships and general partnerships do not require that you create a formal business entity. In these situations, you and your business are considered the same “person.” If the unexpected happens and a vendor, client, or partner sues the company, you are personally liable.

Choosing a formal business structure offers protection to you and your partners. Personal assets are not directly affected, and liability is limited to what you have invested in the company. The entity type also affects the amount of paperwork routinely required, whether you can take investors and raise money and how much you pay in taxes.

Some of the most common options for entity type include:

Limited liability partnerships and limited partnerships are among the simplest structures for businesses with two or more owners. LLPs limit the liability of each owner, protecting against business debts. Partners are not liable for the actions of the other owners. In a limited partnership, one general partner has unlimited liability, while the other partners have limited liability and often limited control over the business. The general partner must pay self-employment taxes, and profits pass through to personal tax returns.

Take advantage of both the partnership and corporation structure benefits with an LLC. It can protect your personal assets, such as your home, car, and bank accounts, if your business faces lawsuits or bankruptcy. Profits and losses pass through to your income, which helps you avoid corporate taxes. However, you are considered self-employed, so you pay Social Security and Medicare contributions through self-employment taxes.

Corporations give owners the most protection from personal liability as they exist independently from the shareholders.

C corporations typically pay taxes when dividends are paid to shareholders on their individual tax returns, and when the company makes a profit.

S corporations allow some losses and profits to pass through to your personal income without paying corporate taxes. Both structures provide the ability to raise investment money, go public, and be sold.

LLC operating agreements and corporate bylaws provide the guidelines by which your business operates, including:

The amount of business risk and goals can help determine which entity is right for you. Once the paperwork is completed, you will also need to get a  Tax ID number  if you plan to have employees. You also will need an EIN if you file excise or pension tax returns.

Although not all businesses must have a license, both Billings and Missoula typically require one, particularly if you sell liquor, firearms, gasoline, or lottery tickets. The specific license and permits you need depend on the business location and activities. If a federal agency regulates business activities, you’ll need a federal permit or license.

Examples of the various agencies include:

Some licenses and permits must be renewed. Failure to do so could result in fines and related fees. A business attorney can help prepare the documents and operating agreements that meet the needs of your new company.

As a small business owner, you have your hands full with developing your products or services, planning sales, and marketing campaigns, and addressing the routine daily details. Your small business will likely need to execute contracts for services and supplies and operational space. Standard agreements between the organization and employees, partners, and investors are also commonly required. It’s essential to get the paperwork right to protect yourself and your company.

When a dispute arises with a partner or another company, an experienced business litigation attorney can help you resolve the issue. If you wait until you’re being sued or require legal representation, it’s already too late for certain types of protection. Some of the most common types of business litigation disputes are:

In the end, the cost of hiring an attorney to help you avoid legal issues is much less than the fees to get you out of trouble once something has already happened. RMK Law has a broad range of experience handling legal problems that arise in commercial and business transactions. Contact us online or call (406) 601-1400 to talk with an attorney about your concerns.

_______

The post Things to Consider When Starting a Business appeared first on Ritchie Manning Kautz PLLP.