Opening a business takes a lot of work. From drafting a business plan to cutting through all the red tape, numerous problems can arise if you make a mistake. Don’t put your entrepreneurial dreams at risk by trying to manage the legalities of owning a business by yourself – hire Doug Newborn Law Firm, PLLC in Tucson, AZ.
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Forming a business can be very difficult and intimidating, especially for first-time entrepreneurs. According to the bureau of labor statistics, only 56% of businesses formed in 2013 are still operating. There are many issues that a prospective business owner or group of owners may need to consider before opening. You can consult a business lawyer to answer your questions -- getting answers before you start your business could help it to survive.
1. What Legal Paperwork Must You Submit? There are many different documents that need to be completed and filed with the state or federal government. You may need to get an employer identification number (EIN) if you plan to hire employees or organize as a corporation. You may also need to fill out articles of incorporation with the state that your business is in. An EIN separates your company from its owner or owners, and you may not need to apply for an EIN if you are a sole proprietor with no employees. Other forms include K-1 forms, which investors receive to find out how much they made or lost from your corporation, and schedule C profit and loss sole proprietor business tax returns.
2. How are Liability Issues Handled? As business owners know well, there are many ways in which your business could become liable if a customer or employee is hurt on your premises or in the course of working for you. If a customer is injured while using your product, or slips and falls while on company property, the injured person could sue for compensation with the help of a DC personal injury attorney. It may be important to have liability insurance established, as well as personal liability insurance, in case your business becomes responsible for someone else’s medical bills.
3. What Will the Legal Structure of the Company Be? One issue that should be decided right away is the legal structure that the company will take. You may operate as a sole proprietorship, if there is only one person running the company. However, if there is a group of owners, it may make more sense to operate as a corporation or an LLC. Two people running a company together may choose to operate as a legal partnership. The structure of the business will determine taxes that are owed, and other exemptions.
4. How Do You Dissolve the Company? Keeping a business operating is never easy, and not all companies will be successful. If you or the owners of a company choose to cease operating, it is important to dissolve it properly. For corporations, it may be necessary to legally dissolve as required by the state in which the company is incorporated. If the proper channels are not followed, a corporation could continue to accrue business taxes or other fees.
5. What Happens If an Owner Wants to Leave? If one of the owners or founders chooses to separate from the business, there will be many decisions to make to preserve the business. Questions may arise such as: will the person who leaves still own an equity stake in the business? What happens to that equity if not? It could be distributed among others in the company, or sold to an outside individual or entity that wants to invest. Regardless of what you ultimately decide, it may be wise to have these questions answered ahead of time to avoid potential lawsuits or arguments.