Are you ready to take the plunge? If you’ve been preparing to start your own business, there are a plethora of legal issues you will need to carefully consider first. The formation of a successful business requires tedious research and prudent planning. As a business-owner, you will inevitably have to deal with various legal considerations in the day-to-day operations of your new enterprise. In an effort to prepare you for this crucial aspect of not just creating, but ultimately growing, your new business, this article will seek to educate you about some of the more pertinent legal issues that will need to be addressed prior to opening your doors.
Determine Your Business Structure
The first step in forming a successful business is determining the type of legal entity under which your business will operate. As a business owner, the structure you choose will affect your potential personal liability, as well as your tax treatment.
This is an unincorporated business that is owned and run by one individual and has no distinction between the business and the owner.
A corporation (sometimes referred to as a C Corporation) is an independent legal entity that is owned by its shareholders.
The distinction between an S Corp and a traditional corporation (C Corp) is that profits and losses can pass through to your personal tax return. Consequently, the business is not taxed itself; instead, only the shareholders are taxed.
A partnership is a single business entity where two or more people share ownership. Each partner shares in the profits and losses of the business.
Limited Liability Company
A limited liability company (LLC) is a hybrid type of legal structure that provides the limited liability features of a corporation with the tax efficiencies and operational flexibility of a partnership.
Your business’s name, logo and good will are all indispensable parts of your brand’s identity. To ensure that you don’t have any unexpected (and potentially, very costly) surprises later on in your venture, it is absolutely essential to perform a thorough trademark search of your business’s prospect name with the United States Patent & Trademark Office, as well as Florida’s sunbiz.org.
Many new business owners may view Non-Disclosure Agreements (NDAs) as irrelevant, however this is big mistake. It is still crucial that you get any and all individuals privy to such information to agree to the non-disclosure of confidential information in writing.
Independent Contractor vs. Employee Classification
Knowing the explicit legal differences between what defines an employee versus an independent contractor is of the utmost importance. This information will help you determine how to make your first hiring move and affect how you withhold various taxes and will help you avoid potential costly legal consequences.
The decision to start your own business can be simultaneously exciting and stressful. Unfortunately, one of the most common mistakes made by aspiring entrepreneurs is not consulting with an attorney. However, with the proper research, careful and deliberate planning, and professional legal guidance, the entire process can go a lot more smoothly.
For professional and knowledgeable assistance with any legal questions you may have about starting your own business, please contact our attorneys Craig Woodward with Woodward, Pires & Lombardo, P.A. at (239) 649-6555 or visit www.wpl-legal for more information.