Business Formation

WHEN IT COMES TO BUSINESS FORMATION,CONSULTING AN ATTORNEY IS ALSO IMPORTANT FOR SEVERAL REASONS…

1. Legal Structure: An attorney can guide you in selecting the appropriate legal structure for your business, such as a sole proprietorship, partnership, limited liability company (LLC), or corporation. Each structure has different legal and tax implications, and an attorney can help you understand the advantages and disadvantages of each option.

2. Compliance with Laws and Regulations: Starting a business involves complying with various federal, state, and local laws and regulations. An attorney can ensure that you fulfill all the necessary legal requirements, such as registering your business, obtaining necessary licenses and permits, and complying with employment and tax laws.

3. Drafting and Reviewing Contracts: Contracts are an essential part of any business. An attorney can assist in drafting and reviewing contracts, including partnership agreements, operating agreements, shareholders agreements, employment contracts, and customer or vendor agreements. They can ensure that the contracts protect your interests and minimize your legal risks.

4. Intellectual Property Protection: If your business involves unique inventions, trademarks, copyrights, or trade secrets, an attorney can assist in protecting your intellectual property rights. They can help you register trademarks, file patents, draft licensing agreements, and enforce your intellectual property rights if they are infringed upon.

5. Liability Protection: An attorney can advise you on strategies to protect your personal assets from business liabilities. For instance, they can assist in forming an LLC or corporation, which can provide limited liability protection for the business owners.

6. Dispute Resolution: In the event of a business dispute, an attorney can help negotiate and resolve the issue through mediation or arbitration. If necessary, an attorney can also represent your interests in litigation.

HOW TO DETERMINE WHICH BUSINESS STRUCTURE IS RIGHT FOR YOU?

1. Decide Your Risk Tolerance: It is important to consider the level of personal liability protection you desire. Certain structures offer limited liability protection, effectively safeguarding the personal assets of business owners in the event of business losses or bankruptcy. Conversely, unlimited liability businesses hold owners fully accountable for legal matters and debts. This consideration holds immense importance for new entrepreneurs, as it directly impacts their exposure to potential liabilities.

2. Determine How You Want to be Taxed: Each type of entity is treated differently for tax purposes. In the case of sole proprietors, the business and its owner are considered to be one legal entity, resulting in the proprietor being taxed on a personal level. Conversely, corporations and limited liability companies (LLCs) have distinct tax obligations, often involving personal tax, corporate tax, or other specialized taxes imposed by the government. It is advised by professionals to adopt strategies to minimize the risk of double taxation, particularly in the early stages of the business. One such strategy is the utilization of an LLC structure, which ensures that taxation is imposed solely on the individual rather than both the individual and the business. Moreover, engaging a payroll service can prove beneficial in navigating the complexities of taxation and payroll, providing essential guidance and clarity on the matter.

3. Formal v. Informal Management Structure: When multiple owners are involved in a business, the structuring of the business becomes more complex and requires careful consideration. The legal framework for such businesses varies depending on the chosen structure. Partnerships necessitate agreement on profit sharing and contingency plans, while corporations require a board of directors for governance. LLCs offer the choice between member-managed or management team oversight, with operating agreements specifying roles. It is crucial for business owners to consult with legal professionals to ensure compliance with applicable laws and to protect their interests in such multi-owner business structures.

4. Administrative Complexity: The legal landscape surrounding non corporation business structures is characterized by relatively light initial paperwork and fees. These requirements are usually straightforward enough for business owners to handle on their own, although seeking guidance from a lawyer or accountant is advisable. In contrast, the administrative complexities surrounding S and C corporations are considerably greater. Failure to meet deadlines, fulfill specified fees, and submit requisite forms can result in punitive measures and penalties for noncompliance.

5. Long-Term Business Goals: The appropriate business structure should take into account not only the current state of the business, but also its future prospects in the next three to five years, or even longer. If the objective is rapid growth, which typically requires substantial financial resources, C corporations offer distinct advantages and are particularly well-suited for businesses seeking investments from venture capitalists or those planning to transition into a publicly traded company within the foreseeable future, as opposed to remaining privately owned. Another critical consideration when selecting a business structure is the contingency plan for events such as the death, bankruptcy, or withdrawal of an owner. While corporations continue to exist even after such occurrences, other types of business structures generally dissolve unless provisions have been expressly made to address them beforehand.

WITH OUR SERVICES, YOU CAN EXPECT THE FOLLOWING:

1. Expert guidance: Our experienced business formation lawyers will provide you with expert guidance and advice on selecting the right legal entity for your business. We will explain the advantages and disadvantages of each option and help you understand the tax implications and the means to raise capital for each designation.

2. Compliance with New York State Laws: Starting a business in New York requires compliance with specific state laws and regulations. Our attorneys will ensure that you meet all the necessary legal requirements, such as registering your business with the state, obtaining required licenses and permits, and complying with employment and tax laws.

3. Tailored Approach: We understand that every business is unique, and we take the time to evaluate your specific needs. With this information, we can create a personalized approach for your small business legal needs, ensuring that all your legal interests are protected.

4. Commitment to Your Growth: As a small business ourselves, we understand the challenges you face, and we are committed to helping you grow. Our attorneys will take the time to get to know your business and its goals, and we will provide legal guidance every step of the way.