If you have been thinking about starting a small business, you may wonder what steps you need to take to ensure that your new enterprise launches as smoothly as possible. Whatever the concept of your business may be, there are vital steps that every new entity must complete before making a sale or performing a service. While this period of anticipation is exciting, it’s natural to feel a bit overwhelmed and confused by the number of decisions and tasks awaiting you. Although hiring a lawyer is not required to start a business, enlisting the guidance of an experienced and knowledgeable business attorney is highly recommended and carries several advantages. From helping you select the right business structure to reviewing contracts to protect the current and future best interests of your new endeavor, a business law attorney can answer your questions, address your concerns, and support you at every phase of the process. The items below may serve as your “go-to” legal checklist for forming and launching a small business with greater certainty and confidence.
Start With Your Mission
While there are seemingly countless tasks to complete as you establish your business, it is important to start with your mission. Companies that take the time to define the “why” of what they do tend to navigate potential challenges more gracefully, as they can turn to their mission statements to inform and guide their decisions. When you take the time to consider the goals, values, and purpose of your business, you are creating a stronger foundation and establishing a cohesive and compelling brand. Whether your business provides goods or services, your clients will gradually come to understand what to expect from your business—this builds customer loyalty and boosts the likelihood of your company’s ongoing success. Although crafting a mission statement may not seem important at this moment, devoting some time to this task means that you are investing in the longevity of your business and giving yourself, your business partners, and your employees a “north star” to inform the decisions you will make in the future.
Articulate Your Desired End Goal(s)
It’s common to become lost in the present moment when launching a new business. There are so many little details to review and complete, so thinking about five or ten years from now may not be your top priority. However, identifying your end goal can help you shape the course of your business to support this journey. For instance, you may hope to sell your business to a larger corporation one day, or you may want to work towards the goal of becoming a publicly traded company. Conversely, some smaller businesses know that they want to keep their model local and family-owned. Choosing an end goal will help you to identify the most strategic path forward to support—and, one day, achieve—your vision.
Choosing a Business Entity
There are several ways to structure your new business. The type of entity you choose will affect tax considerations, legal liability, and the types of investments you may accept for your business. Below are a few of the most common business entities you may want to consider when starting your new endeavor.
If you are establishing a business on your own, a sole proprietorship may be the most straightforward and appropriate choice. Sole proprietorships are relatively easy to set up, and you will not be subjected to double taxation (i.e., taxed at both the business and individual levels). However, sole proprietorships do not provide liability protection. If someone sues you or your business, your personal assets are also at stake. Sole proprietorships work best for smaller, side-business endeavors; those interested in a more complex and lasting company should consider other formation options.
There are a few different types of partnerships, all of which apply to two or more people looking to go into business together. A limited liability partnership (LLP) allows the partners to start a business together while enjoying personal liability protection. A limited partnership (LP) is a structure that separates and clearly defines the roles and responsibilities of each partner. However, an LP does not provide liability protection. There are a few other types of partnerships, so discuss your options in greater depth with a business law attorney.
Limited Liability Company (LLC)
A sole proprietor, partners, or more than two people can form a limited liability company. This option provides liability protection and pass-through taxation. LLCs are a popular choice, as they are typically less complicated than corporations, and they provide personal liability protection to the founders. As long as you do not intend to work with a large number of investors or pursue investments from other companies, an LLC may be the way to go.
Corporations involve the highest number of steps, and their rules are quite complex. This option may work best for those looking to establish a large-scale enterprise that involves multiple investors and pulls from several funding sources. Discuss your needs with your attorney to determine whether an S or C corporation may work best for your business.
Work With a Business Attorney For Ongoing Legal Support
In addition to the steps listed above, you will face several other considerations to ensure that your business launches with the most robust foundation possible. Drafting clearly worded contracts that protect the best interests of you and your business, seeking intellectual property protections, and creating an employee handbook that minimizes the chances of potential legal issues from arising later on are just some of the critical tasks you will need to navigate. Working with a caring and skilled business lawyer is the best way to ensure that your business enjoys the legal protections it needs to thrive. Forge a lasting relationship with your attorney so you can enlist their help the moment a question arises.
If you have questions about launching a small business in Colorado, call Judex Law, LLC, today at (303) 523-4022 to speak with a knowledgeable and supportive business law attorney.