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Don’t wait to incorporate. Lawyers like Rocket Lawyer legal system can offer enormous protections to entrepreneurs. The genius is in limited liability that shields personal assets from business failure, enabling entrepreneurs to dust themselves off and try again. Incorporation is the first step. It also can offer tax advantages, depending on the individual situation. Whether you’re forming an LLC, S-Corp or NPO, building a sound corporate foundation is the first thing an entrepreneur should do. Before launching your enterprise, you should ask a lawyer: “Is incorporation right for me?” And then go from there.
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Get it in writing.Whether it’s a new employee or a repeat client, never assume anything is binding unless it’s in a contract. Year-over-year Rocket Lawyer’s small business index finds the biggest legal issues small businesses face are contract negotiations (24%) and failing to collect payments (18%), both of which could be helped by getting agreements in writing. Contracts provide both parties with their obligations, rights, and responsibilities and while they don’t guarantee the other party will make good on the agreement it does guarantee that a court will look kindly on you if they don’t.
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Refresh or create your business will: When creating an estate plan know your business model (Sole Proprietor, Partnership, LLC or S-Corp) as there are different legalities and tax implications for each. If you are in a partnership then you should create a Buy-Sell Agreement commonly called a “business Will.” This document details what happens should one party leave the business either through active means (alive) or circumstance (death). If you already have a Buy-Sell Agreement or an estate plan, it is always good practice to check it annually especially if you have a change in life circumstances such as marriage, divorce, birth of a child, disability among other reasons. This will make sure your interests in the business are secure and that your designated successor will be able to legally retain control of their part of the company.
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Keep good counsel: Year after year small businesses say complying with government regulations is their top concern, and this year there are sure to be many changes as a new administration takes office. So, it’s good to consult with a business attorney more than once a year and not wait until a big issue arises. It’s better to pay a little up front than a lot down the road, especially when dealing with federal regulations.
Have a Happy New Year and get questions answer from Rocket Lawyer.
