Congratulations on your new business!
Starting your own business is exciting but certainly overwhelming as well. There are many legal needs as well as other significant planning aspects that are critical to the success of your business and it is important that you stay on top of these things from the very start. Foresight Legal will help you on your way to organizing your business, legal protection and peace of mind.
Some things to think about…
Although legal matters may be the last thing on your mind, you should begin thinking about the following legal documents and whether they make sense for you.
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Articles of Incorporation
There are many reasons to incorporate your business including limiting your personal liability, gaining tax advantages, anonymity, and flexibility as well as guaranteeing an enduring business structure. Anyone who operates a business may incorporate.
A Corporation springs into existence once the articles of incorporation are filed with the Secretary of State. The articles of incorporation set forth the name and address of the corporation as well as authorize the issuance of stock, limit liability of directors and state the corporate purpose. There may be other requirements, such as other documentation and procedures, necessary to complete organization so it is important to be informed of all such requirements to ensure the corporation is complete and properly organized.
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Bylaws
While there is only one instance where it is required by law that a corporation adopts corporate bylaws, virtually all corporations adopt them. They are essentially the game plan of the corporation. The exception to the general rule that bylaws are not a legal requirement is when the number of directors is not stated in the articles of incorporation. If the number of directors are not specified in the articles of incorporation then bylaws must be adopted specifying that number of directors for the corporation.
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Limited Liability Company
An LLC is a business entity, which combines elements of a corporation, partnership, and sole proprietorship. An LLC is created under state law and unincorporated, yet it may behave like a corporation by raising funds, adding new members, and limiting liability. The concept behind an LLC is to allow members (owners/partners) to share in the ownership benefits while risking only liability of their investment in the company. That is, if an LLC files for bankruptcy, a member will lose their investment in the company but will not have to pay any outstanding company debt. However, an LLC behaves like a sole proprietorship or partnership in its operation flexibility and its pass-through tax status.
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Operating Agreement
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General Partnership Agreement
A partnership agreement is a contract for two or more people or entities used to form a business partnership. The agreement sets forth the terms and conditions and rules regarding governance of the partnership. The agreement also describes the kinds of contributions each partner will make and set forth whether it will be an equal partnership or if one partner will make a larger contribution of money, or labor than the other partner(s).
