Archive for October, 2009

New Business

Thursday, October 1st, 2009

Starting your own business during this prolonged recession may seem counterintuitive, but for others, the turbulent economy is just the right spark to ignite the entrepreneurial spirit.  Whether you’re business idea involves a new computer software, selling ice cream, or creating a production company, starting your own business requires careful planning and a lot of hard work.

After working on your business plan, analyzing the risks and rewards, strengths and weaknesses, and figuring out how you’ll finance your business, one important decision you’ll need to make is to decide which business structure best suits your plans:  S-corporation, C-corporation, Limited Liability Company, partnership, sole proprietor? 

Each type of entity has its particular requirements and restrictions, as well as advantages and disadvantages.  For example, if one of the owners of the new business will be another corporation, then an S-corporation will not be appropriate.   If the business will own real property, then an LLC may be attractive because of possible tax benefits.  And if there are multiple owners, you will need to think about agreements that deal with how to handle any future transfer of ownership.

Besides issues of entity formation, business owners needs to think about other important legal issues from the outset, including, but not limited to, commercial leases, vendor agreements, obtaining required licenses and permits, copyright and trademark issues, and, of course, hiring and firing employees.     

Without receiving sound legal advice upfront, business owners may soon find themselves besieged with unanticipated problems.  Instead of spending time growing their business, they may find themselves struggling with penalties and fines from government agencies, competition from copycat businesses, and lawsuits from disgruntled former employees.   

However, with a great business plan, solid legal advice, elbow grease, and a bit of luck, entrepreneurs can focuse on executing their business plan, rather than getting bogged down with costly distractions.  As Benjamin Franklin noted, “Remember that time is money.”  And, even in this economy, there’s no better time than the present.