Susan Floyd Law provides affordable and straight forward legal advice to entrepreneurs and business owners. Our goal is to provide a simple streamlined process to allow our clients to select the business entity that best suits their needs, including general tax considerations, asset protection and limited personal liability, organizational structure, and memorializing how the company will operate.
Important Considerations before you start your business:
Do you plan to have a partner or co-owner? For some entrepreneurs, starting a business with a partner is a great way to get the business off the ground. Each person brings talent, motivation, drive, labor, experience, and financial responsibility to the relationship. The right relationship can sometimes bring a synergy to the enterprise that one person could not achieve alone. However, going into business with another person is in many ways similar to marrying that person and a rift or separation in the relationship can cause tremendous personal and financial upheaval. For these reasons, it is critical in the beginning to contemplate each person’s role and responsibilities, including the financial and labor contributions, how disagreements will be resolved, and establish an exit strategy should you desire to part ways. This may include how interests in the enterprise can be transferred or sold and what approvals are necessary for such a transfer. Also, should one of the parties pass away, the business arrangement should contemplate this event and how it will be handled so that the business can continue or be sold. At Susan Floyd Law, we will help you analyze the best approach for your needs and incorporate these choices in your operating documents to minimize or eliminate future conflicts to the extent that those conflicts can be foreseen and addressed in the beginning of your enterprise.
What are some of the considerations in writing a business plan? You may wish to begin with the basic information you will need to form your business entity, including, your business name, the general business purpose as well as a mission statement and/or specific business purpose, the location and/or legal address for the company, the identity of the registered agent (this can be the business owner), and the identities of the officers and/or directors of the company. The next step may be to establish how the business will be funded until it is self-sustaining, this may include an operations budget and a projected cash flow for at least one year. It is also important to consider whether the members of the enterprise will engage in the business activity full-time or part-time and specify how much time each party will spend in developing the business enterprise. If you are leaving full-time employment, you will need to consider your personal expenses in addition to the business expenses. You may also wish to establish lines of credit that are consistent with your risk tolerance and overall financial goals. Do you plan to solicit investors and/or sell interests in the company? If so, you will need to carefully consider the information you communicate to potential investors and what effect this will have on the company operations. Depending on the type of business, you may also need to investigate insurance coverage and other legal agreements, including leases, inventory purchase agreements, and much more. In addition, it may be necessary to obtain state and/or local business licenses and permits. You may also wish to consider whether you will hire employees or retain private contractors to provide services. These are just some considerations in contemplating your business enterprise. At Susan Floyd Law, we understand that forming a business enterprise is a significant event and that is why our services focus on providing you with the core formation and operating agreements that you will need to begin your enterprise.
What are the advantages to forming a separate corporate entity as opposed to operating as a sole proprietor? Each situation is unique and that is why it is important for you to consult with an accountant or independent tax advisor; however some advantages may include, possible tax savings in the deduction of expenses, possible savings in the payment of Employment, Social Security and Medicare taxes, and simplifying your tax accounting requirements and procedures. Corporations can provide limited personal liability and asset protection for their owners. Forming a corporate entity also establishes credibility with financial institutions and in the marketplace with potential clients and customers. Corporations offer continuity in the event that an owner passes away and in many cases owners wish for their descendants to continue the family business and to establish a legacy for the future. Corporations can offer more retirement plan opportunities for its owners and employees.
Why is it important for business owners to also have an estate plan? Regardless of the business entity you choose, it is very important to plan for your retirement, death or disability in order to protect the business that you have worked so hard to create. Estate planning can be critical if the business is to continue after the death, disability or retirement of an owner. An estate plan can resolve liquidity needs by incorporating insurance, address the transfer of interests to beneficiaries, incorporate estate tax planning, provide for the valuation of the company, and resolve critical issues of business management during the transition in ownership. Each situation is different and we will work with you to ensure that your legacy continues.