Most entrepreneurs have at least a general understanding that operating a business through a separate entity can be advantageous. All too often, though, they lack knowledge about what type of entity to choose or how to capitalize the new entity properly and sufficiently. Similarly, they’re often unclear about how to govern the new entity in a manner that best positions them to capitalize on their economic opportunity and even make a profit doing what they love, that preserves its separateness, and that insulates them from personal liability.
The decision to operate a new business via anything other than a sole proprietorship is only the first step. There are many other things to consider in forming a new business, including accounting, tax, financing, employment, and regulatory considerations. In that regard, an initial consultation with an attorney and, for that matter, an accountant is crucial. Structuring your new business correctly in the beginning can often set you up for success ahead or, at least, minimize problems that can sap a new company.
Stone & Baxter can help you immediately by eliminating or navigating around the potential pitfalls that plague so many well-intentioned but ill-conceived ventures. And if you’ve already made some of the mistakes that are so common in starting a new venture, we can likely help you correct those mistakes. Click here to get started.
If you’re still reading, then we have some words of warning.
First, you shouldn’t rely on prepackaged legal forms as a substitute for legal advice. The simplest forms are rarely suitable except for the simplest of ventures. The most complex forms might contemplate more of the new business considerations, but they can be difficult to understand at best and dangerous at worst.
Second, a good accountant, just like a good lawyer, can be indispensable. However, a good accountant will steer clear of providing legal advice and, except perhaps in the area of tax planning, leave entity selection and other formation issues to attorneys. To be fair to CPAs, with whom we have some of our closest professional relationships, that recommendation goes both ways.
We typically advise clients on the following formation issues:
- Choosing the entity type
- Registering the entity with the Georgia Secretary of State
- Drafting organizational documents
- Applying for an EIN and other necessary tax IDs
- Making timely tax elections, as applicable
- Setting-up a proper corporate minute book
- Training on documenting corporate actions
- Drafting buy-sell and other equity-related agreements
- Registering the entity in other states as necessary
- Applying for business licenses and the like
- Drafting employment agreements
- Choosing appropriate insurance coverage
- Obtaining initial financing
- Drafting leases
Invariably, though, client interviews reveal additional formation issues and considerations depending on nature of the proposed business.
Many entrepreneurs understand the importance of these initial considerations, but are wary of the cost of addressing them, especially when start-up funds are limited.
With only limited exceptions, we do not charge for our initial consultations regarding start-ups and formation. Thus, following a comprehensive interview, we’ll recommend a start-up plan and estimate the cost of implementing it. And we can perform many of the initial formation on a flat-fee basis.
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