There are countless opportunities to make major mistakes in the early stages of business development. People often assume that they can start a company without any professional support and then end up diminishing their protection or increasing their personal liability risk. They may also make tax-related mistakes that end up affecting their company’s long-term viability.
Most entrepreneurs benefit from partnering with an attorney as they explore the idea of starting a business. A lawyer can help someone identify and address the challenges that commonly arise when starting a new business, and they can guide someone in their endeavors to start a profitable company. The following are some of the common challenges that people may have a hard time overcoming on their own behalf when seeking to start a business.
Choosing a business entity
The type of business that someone starts can have a major impact on everything from their personal liability for company debts to the taxes they have to pay. Some people might benefit from the creation of a relatively streamlined limited liability company (LLC), while others with more ambitious projects in mind may need to form a corporation. A lawyer’s guidance can make a big difference during the entity selection process. Entrepreneurs may need forward-thinking guidance provided by someone with a broader perspective instead of a focus on their short-term goals.
Identifying important obligations
Businesses need to comply with both state and federal laws. They need to carry certain types of insurance and have plans in place for different operating risks. They will also need to retain funds to pay the right taxes. Many entrepreneurs don’t understand what questions they need to ask about business operations and taxes, much less how to answer them. Some of the more pressing concerns for an entrepreneur might include:
- Do I need to collect sales tax?
- What tax return do I file for my small business?
- How can I save taxes in my new business?
Simply performing an online search or talking to other people in the same industry won’t necessarily yield the best or most accurate answers to those questions. A lawyer who is familiar with someone’s ideas and current circumstances can help them determine what obligation they need to fulfill, what insurance they need to carry and what other steps they need to take before starting a business to adequately protect themselves.
Instead of trying to save money by cutting corners early in the business formation process, it is almost always preferable to invest in proper protection from the earliest stages of business development. Bringing in the right support can reduce the risk involved in developing an entrepreneurial concept.