Public FAQs – New Business
Whenever you start a business, you should always look to consult with an attorney. It’s important to always remember things will never go the way you intend, so it’s important to try to minimize as many problems as you can before they begin.
When you want to do something highly specialized like mergers and acquisitions, then yes, a specialized attorney would be recommended. If your needs require something more basic, then an experienced corporate attorney should be able to accommodate all your needs.
All the questions you need to ask to address your needs.
You are the boss and you are the one with the goals and vision; it’s the attorney’s job to help you get to your goal.
The bare minimum would be having all of your incorporating documents completed in addition to an Operating Agreement.
The Operating Agreement is essentially the “law of the land” for the company, and should be comprehensive to cover all possible issues you think may arise.
After you have those documents completed, it is worth looking into other documents (such as shareholder agreements, resolutions, etc.) to ensure all your business needs are covered.
This is critical because often times in litigation, the burden is on the business to produce information during litigation that can make or break a case.
For example, in a Minimum Wage action, all an employee needs to establish is a good cause basis for a claim of not being paid for his/her work.
It is then the company’s responsibility to produce records that prove otherwise. If a company cannot produce those documents, then the court will often take the word of the employee.
This will largely depend on your resources and how much dedication to legal matters your business demands.
If you feel like legal issues are few and far between, then having counsel on a retainer basis is usually recommended; however, if you believe that legal issues (good or bad) will be dealt with, or if you believe you will simply need sound legal advice in making business decisions, then having an in-house counsel (that is hired as an employee) may be the preferred method.
This is always recommended. Even though your business may be a small corporation, it is always a good idea to make sure that your “corporate books” are always clean and organized.
You may always try to trademark, patent or own your unique ideas and inventions!
You can always be held personally liable through company actions if you engage in reckless or ill-intended actions that go beyond the scope of the duties of company. Additionally, you may be held liable for other actions under a doctrine called “piercing the corporate veil”.
This depends entirely on the needs and goals of your company. But first, let’s go over the basic definitions of each of the above:
C Corporation: This is the most common type of company formed in the US. C Corps offer far-reaching potential and growth through the sale of stocks — which can attract investors. Also, the amount of shareholders you can have is unlimited.
S Corporation: An S Corp is basically a C Corp light — it offers investment opportunities, perpetual existence and it offers limited liability. But S Corps file taxes yearly and are not subject to double taxation.
Limited Liability Company (LLC): An LLC is the least complex business structure. Unlike an S Corp or C Corp, an LLC is flexible. LLC businesses have the benefit of pass-through taxes, limited liability and legal protection for personal assets.
Partnership: Partnerships are a legal form of business between two or more who share management and profits. The federal government recognizes several types of partnerships. The two most common are general and limited partnerships — each define variations of the partnership.
Sole Proprietorship: Sole Proprietorship is the simplest way one can operate a business. BUT it is not a legal entity. It is a person who owns a business and is personally responsible for its debts –it does not create a legal entity separate from the owner.
Typically, smaller businesses opt for incorporating as an LLC or a partnership; but this type of structure can still be very useful for larger companies as well.
Ultimately, it’s a choice between tax savings and liability exposure.
The ideal location for you to incorporate your business is where it will primarily be located. But don’t take this to mean you can’t do business in other states because you can.
A Nondisclosure Agreement (NDA) is a legal contract, creating a confidential relationship between a person who holds some kind of trade secret and a person to whom the secret will be disclosed. This can include product details, working ideas or other items you consider to be proprietary.
NDAs and Non-Compete Agreements are absolutely critical so former partners and employees cannot take information or ideas from the company you have worked so hard to build.
This depends on the corporate documents and the structure of your business.
You want to strike a balance between good profit and good partners. In order to strike a good balance, you need to consider the worst case scenarios in the event the business doesn’t go as planned.
You should have an airtight employment contract that is clear on all of its terms. There is nothing worse than thinking you have an employment contract that addresses everything and then getting litigated over something you missed.
Among the terms and conditions of your employment agreement, there are statutory obligations you must comply with, such as the Virginia Minimum Wage Act, which requires all employees to be paid for their time.
The burden to prove how much time was worked and how much was paid is on the employer, so it’s imperative to have good corporate infrastructure to account for your payroll.
This depends largely on the strategy behind protecting yourself from lawsuits, such as determining whether or not you are in an industry where the chance of prevailing in a lawsuit is high or low.
Depending on this, you may, for example wish to keep an attorney’s fee provision in or out of the contract. There are tons of small nuances going into this question, so it’s definitely a great idea to reach out to one of our experienced corporate law attorneys.
You should always prepare for growth in your company, but you should also always prepare for failure.
The adage of “hope for the best but expect the worst” is something all business owners should take to heart. The corporate documents at the heart of your business, if done correctly, will outlast the changes to your business, no matter how much it changes.