Considering the growing popularity of websites offering legal forms and self-help guides, it is helpful to keep in mind some reasons why using an experienced business attorney to form a company for your business is advisable:
1. Forming a Separate Legal Entity. If you are operating as a sole proprietorship or general partnership, you are not protected from liability. Setting up a separate legal entity can protect your personal assets from risks related to the operation of your business. An experienced business attorney can advise you on which legal structure makes the most sense for your business whether it be, for example, a limited liability company, limited partnership, C-corporation, or S-corporation.
2. Advice Regarding Maintaining Limited Liability. Just filing the forms is not enough. Company operation is as important as the formation documents. The way you operate your business can increase the risk of liability and the risk of a plaintiff’s attorney piercing the corporate liability shield and attacking you personally for legal liabilities. An experienced business attorney can give advice regarding operating the business in such a way as to reduce those risks and maintain limited liability.
It is much cheaper to set up your company in the proper fashion in the beginning, have the right legal documents in place, and operate your business in the proper fashion than to find problems, or for a plaintiff’s attorney to find problems, with your business later. Litigation on the back end is much more expensive than doing the proper legal work on the front end.
3. Agreements among Business Owners. Having multiple owners of a business has its advantages and disadvantages. Care needs to be taken that the relationship between the owners is well defined. An experienced business attorney can draft an agreement that sets out the arrangement between the owners and includes buy-sell provisions to account for possible future events such as death, disability, divorce, or bankruptcy of a business owner, and determine what happens to that owner’s interest in the company.
4. Tax Structure. An experienced business attorney understands the tax implications of the types of legal entities available. Often, tax elections should be made at formation to save you time and money. Further, your operations can be structured in such a manner to save taxes. An experienced business attorney can advise you on these and other tax issues.
Some people are hesitant to want to pay an attorney to set up their company and provide advice, but it is better than being forced to pay an attorney to deal with issues later. Having the proper setup for your business will not guarantee that you will not be sued in this litigious society, but it will help reduce the chances of you being sued and maximize the chances of winning a legal dispute if you are sued. Having an experienced business attorney that understands business law, tax implications, and liability risks allows business owners to focus on the profitability of their business rather than worry about legal and tax issues.
J. Brian King is an experienced business attorney and can be reached at https://businessattorneylaw.com/.