5th May 2018
After making the decision to start your own small business, it is a smart idea to make an experienced business lawyer an integral part of your team as soon as possible. He or she will help you to determine which type of entity to form, and then relieve you of the burden of preparing the documents and making sure things are set up properly. This can potentially save you huge headaches down the road. While you may think that forming a company is just simply filling out a short form and filing it with the State, it can and should be more involved than that.
Your circumstances and your plans for the business may dictate which entity is best. For instance, a limited liability company may be the right choice if you will have several members in your company and you wish to have different voting rights for certain individuals. The flexibility of an LLC may be just what you need, and you will want to ensure that an Operating Agreement is prepared that correctly sets things up. You may also want a noncompetition provision included in the agreement, so that members of your company are not out assisting or otherwise associated with any competing businesses. If you anticipate that your product or service will eventually attract sophisticated investors, a C corporation may be a good idea. All of these considerations are things that an experienced business attorney can handle. You will have many other things on your plate to deal with, and trying to cut and paste some random form you found on the internet is simply not a good idea. Choosing between an S corporation, a C corporation, a LLC, a general partnership or a limited partnership should be a decision that is made only after consulting with a knowledgeable business lawyer and your tax advisor. And then a proper set of Bylaws, Operating Agreement, or Partnership Agreement should be prepared.
This is not the time to try to save a few bucks and attempt to go it alone and do it yourself– even if a TV commercial or internet ad makes it looks so easy. Attorneys who routinely help small business owners should be able to give you a reasonable flat fee to get the business properly formed, and the potential problems you avoid down the road will more than justify the investment.