STARTING A BUSINESS: FACTORS TO CONSIDER AND
REASONS YOU SHOULD CONTACT TENNANT & EWER BEFORE STARTING YOUR BUSINESS
When entrepreneurs decide to start a business, they usually have a great idea and some money to invest in the enterprise. Some people opt to start the business by themselves or with family members; others have partners or other investors who will not be involved with the management of the business. Whether starting the business alone or with others, there are a number of considerations that need to be addressed. A lawyer at Tennant & Ewer experienced in business law and entity selection will help you focus on these important considerations.
Type of Entity. There are various forms of business entities. The one that is correct for you depends on a variety of factors that must be considered at the outset. The choice of business entity dictates the manner in which the business is operated. Choosing the correct entity will help avoid personal liability for the wrongs of partners or employees and will provide you with the control that you want. For additional information, please refer to the article, “Types of Business Entities.”
Liability. Business entities provide different protections and risks to the business owner or investor. Personal liability means that your personal assets are exposed to the debts of the business. The proper choice of entity can help you avoid this situation or minimize your risk. Knowing your personal liability and reducing the risk to your and your family's economic well-being must be considered in establishing a business.
Autonomy. With many business entities, issues you do not decide are decided for you by state law or regulation. Most states, including Massachusetts, have adopted laws that fill the gaps for business entities when their charters, by-laws and other organizing documents are silent. You may be subject to a number of laws and regulations that you do not even know exist.
Capital. Businesses require capital to start operation, and must maintain accurate records of income and distributions and have processes in place to be financially responsible. Different business entities may require different procedures for raising capital and making distributions and also for the record keeping required.
Registering, Licensing and Permits. Certain business entities are required to register with the state to obtain legal status. Even businesses that are not required to register may be required to obtain licenses or permits.
Contracts. Most businesses sign contracts for space, services and supplies. Businesses often have agreements between partners, investors and employees. Ensuring that contracts are in place and that its terms and provisions protect you to the greatest degree possible will help avoid costly misunderstandings or litigation in the future or protect you if there is litigation.
Multi-State Business. The requirements for forming and conducting a business in one state may be different from another state's requirements. If you do not abide by the rules of the states in which you do business, the protections you have in your home state of operations may be lost.
Tax. Different business forms provide different tax advantages and disadvantages. We work closely with your accountant or tax advisor in helping you establish your business.