Why Do I Need an Attorney When I Start a Business?

When a business is formed there are purposes and objectives the individual(s) have in mind.  They may be starting a new business, purchasing a business or merging with a business.  The goal may be to achieve some level of liability protection, to form a separate business identity on which to build a brand, or to establish an entity to accommodate multiple individuals with different roles or ownership interests. 

Before this can be accomplished it is necessary to have agreements between the business participants to memorialize their mutual understanding of who is responsible for managing the business. Co-owners of a business need to reach agreement about numerous issues including the percent of owners required for decision-making, respective roles and responsibilities, liability provisions, and co-owner death, withdrawal or termination. It is even recommended for a single member entity to have an operating document such as bylaws or an operating agreement.

The business entity is then chosen and formed to be legally existing with the appropriate filing requirements. Ongoing records, periodic filing with the Secretary of the State and payment of any appropriate fees to maintain good standing of the business and of the business entity will depend on the specific type of business and business entity. Different business entities, for example, corporation, limited liability company, partnership, have different formation and ongoing recordkeeping requirements to maintain, as well as particular laws and regulations to comply with depending on the type of business.  A home improvement business, a restaurant, and a professional services firm may operate under the same entity framework but have decidedly different compliance requirements.  Certain professionals cannot escape individual liability for acts or omissions in their professional capacity by forming a business entity.

A discussion of the nature and operation of each individual business and objectives of the owners is necessary in order to provide advice and direction.  Getting off to the right start at the outset with formation, recordkeeping and compliance, as well as the agreements between co-owners, can spare greater expense and pain later on.  Though online services will file the basic documents to form a business, without the appropriate ancillary documents that fit the circumstances, for example, by laws, operating agreement, buy sell agreement, the parties may have difficulty running a business and/or resolving conflicts with each other.  For the operation of the business it is strongly recommended that the business have written agreements with sub-contractors, consultants, vendors, and others as appropriate. Most businesses can benefit by having an agreement with their customers setting forth the services to be provided including price, termination, and limitation of liablity.  Such an agreement helps to avoid misunderstandings and may reduce risk to the business.

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| Phone: 203-207-0105
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| Phone: 203-207-0105

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