Whether you’re a first-time entrepreneur or an experienced business owner, it’s always good to ensure you have a grasp of the fundamentals of business law. The legal status of your company matters not only during its formation or on a day-to-day basis, but also for its longevity and potential to grow.
Below, we address some relatively basic business law questions that we get from clients of all levels of experience. By answering some of these questions here, we hope to provide you with the knowledge you need to continue thinking about the next step for your company and how our attorneys can help you get there.
1. Which Type of Business Structure Should I Use?
Deciding how to form a new company is no small matter. Businesses are commonly structured as sole proprietorships, partnerships, limited liability companies (LLCs), and corporations. There are a number of factors you will need to consider before selecting the entity most suited to your needs.
Some of these factors include the following:
- The company’s primary business activity
- How many employees the company will have
- If investors will be involved
- How the company is owned
- Are all business owners involved in management?
You should discuss these matters in-depth with your attorney, who can advise you of your options and which entities may work best for your company.
2. I Can Find the Contracts & Legal Documents I Need Online, Why Do I Need an Attorney for These?
When you find pre-prepared contracts and forms online, understand that these were not built with your specific needs in mind. That means someone wrote them with broad pen strokes that can leave wide loopholes for those looking to take advantage of your business to do so.
Only an attorney who has specifically prepared your company’s contracts and legal documents can offer you the confidence of knowing that your needs were considered during their preparation. This not only goes for written materials related to your business dealings, but also employee handbooks and agreements.
3. What Is a Fictitious Business Name & Why Do I Need to File One?
Sometimes the name your company is registered with the government as may not be the name you wish to do business as. For example, a company registered as “Cool Company, Inc.” might want to market itself as “The Cool Company.” Cool Company Inc. would need to file its fictitious business name as The Cool Company so that the public can be informed about who actually owns The Cool Company.
Fictitious names are important for sole proprietors who may wish to give their business activities a name other than their own.
4. Does My Business Need a Tax Identification Number?
If you operate a partnership, LLC, or corporation, however, you need to obtain a tax identification number from the IRS.
Sole proprietorships do not need business tax I.D.s because these businesses are indistinguishable from their owners as legal entities – the owner’s Social Security number is all that’s needed.
5. How Can I Protect My Personal Assets from My Company’s Creditors?
If asset protection is an important concern, you want to address this when you’re forming your new company. Different business entities come with varying levels of liability protection – for LLCs (limited liability companies) and limited partnerships, the level of protection offered by each is quite literally in their names – limited.
Corporations offer the most amount of personal liability protection, often completely indemnifying business owners from their companies’ debts. The least amount of protection one can have is doing business as a sole proprietor, where the business entity is indistinguishable from the business owner – meaning business assets/debts and personal assets/debts are one and the same.
Have Another Question? We Can Help!
If you have a question about a business law matter we didn’t address here, or an inquiry that may concern a unique situation, please reach out to our legal team at Hare, Stamm, Harris & O’Connor, LLC. We suggest scheduling a consultation with one of our attorneys so you can have an opportunity to speak with a legal professional one-on-one in a confidential setting and without any obligation to hire us for further assistance.
Get in touch with Hare, Stamm, Harris & O’Connor, LLC today by contacting us online or calling (413) 251-6232.