Start Up Company Legal FAQs
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Often the question we hear from new business owners is not about a specific issue but more generally "what questions should I be asking?" Below are some questions we think you should be asking, and their answers.
How do I protect my personal assets from business risk?Incorporating as a limited liability company (LLC), S Corporation, or other corporate form should protect you from personal liability for your business debts.
You can lose this protection, however, if you do not observe the formalities of the corporate form or handle your accounting appropriately. For example, if you regularly use money from the business to pay your personal expenses without treating it as a debt from you to the company, or make decisions for the company without following your operating agreement, someone may later claim that the corporate form was a sham and that it was really just your own personal enterprise. This is called "piercing the corporate veil," and something that could come up if you have a dispute down the road and your business does not have liquid assets. You should work with your lawyer and your accountant to make sure you know what you need to do to preserve this liability protection |
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What's the difference between an LLC and an S corporation?
Both forms of legal entity accomplish the same legal goal, which is to protect the personal assets of the business owner from liability. They both also have the tax advantage of only taxing your income once. The main differences involve financial and tax considerations, which you should discuss with an accountant. Generally, it is easier to change from an LLC to an S Corporation than it is to go the other direction, so most of our clients starting a business begin as an LLC.
Should I wait until I start making money to incorporate?
We hear this question a lot. What you need to remember is that as long as you are a sole proprietorship, you are personally liable for your business' debts. So when you start making money is not the important milestone. In truth, you are going to owe people money before you start making money, meaning there is no reason to wait to create your legal entity.
How do I protect my brand?
You may not feel like you have a brand when you first start. Eventually, though, as you gain traction in the marketplace people will begin associating your company name, your logo, and other images or visuals associated with your business with the services or products you provide. Even at the beginning, your words and images are your intellectual property and worth protecting. Obtaining a trademark on your logo and/or your business name is a relatively simple matter, especially if you do it early on before anyone is interested in copying it.
What insurance do I need?
If you have employees, you must carry workers compensation insurance, though in most industries that is not a significant cost. Other coverage you might want or need will depend on the nature of your business and the terms of your lease if you are renting space for your business. You can find some trusted insurance advisors on our referral page.
How can I manage payroll and human resources functions?
This can seem overwhelming, but the reality is that there are many payroll service providers who can take care of most of the hassle of taxes, withholding, and PTO accrual for you for a relatively low price. See our referral resources page for some local providers we know and trust. With respect to things like employment policies and practices, we can help you create an employment manual and other policies you need, and provide guidance on how to handle offer letters and termination issues.
How can I find other entrepreneurs to network with and share ideas?
This is not a legal question, but a need we hear almost 100% of the time from new business owners. Especially if you don't have partners, it can be a lonely job and easy to second guess yourself, whether you are looking for wisdom about sales and marketing, business operations, financial management, risk management, or anything else.
We walk in those shoes too- slnlaw is a law firm, but also a business, and we have faced many of the same obstacles you are facing or anticipate facing. This is part of why we have assembled our list of referral resources, but we also frequently make introductions (with client permission) between businesses in similar industries who might be able to help and support each other.
We walk in those shoes too- slnlaw is a law firm, but also a business, and we have faced many of the same obstacles you are facing or anticipate facing. This is part of why we have assembled our list of referral resources, but we also frequently make introductions (with client permission) between businesses in similar industries who might be able to help and support each other.
When should I call a lawyer?
If you were a big company with an in house legal department, you might walk down the hall and ask a question before you sign a contract, make a job offer, launch a product or service, or make any number of other business decisions. Small business owners do not have that luxury, and yet those could be the most important 15 minutes you spend if they help you avoid an expensive problem or worse, a lawsuit.
How We Can Help
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We are happy to help guide you with whatever legal challenges your business may be facing. You can use the button below to schedule a free information call, or just give us a call at (781) 784-2322.
