Starting your own business is an exciting experience for every new entrepreneur. Amid the excitement, however, there is often much uncertainty.
If you are starting a business, it is important to go through full life cycle planning with an experienced business attorney. A business lawyer can explain how to start a business, identify risks that could potentially affect your business, and create a business exit plan. In addition, a business attorney can help generate contracts that protect your business interests when entering into routine transactions or sharing confidential information.
Meeting with a business attorney for a consultation is a good first step to protecting yourself and your business from potential risks. In your first consultation with a business law attorney, you should be prepared with information about your business as well as questions. If you are not sure what to ask, here are five questions we believe you should ask your business attorney.
1. What Business Structure Should I Choose for My Business?
Before you serve one client, sell one product, or take one payment, you should determine how you want to structure your business. If you operate a business in North Carolina without incorporating, you are considered a sole proprietor. Under a sole proprietorship, you will be legally considered as the same “person” as your business. This means that you are personally responsible for debts and legal liabilities that your business incurs.
If you want to protect yourself and your family from business liabilities, you should consider forming a business entity. There are several business entity options for entrepreneurs, each with their own unique benefits. For example you may choose to form a corporation, an LLC, or a limited liability partnership depending on how you want your business to be managed and taxed. As the owner of a business entity, you will shield your personal assets from creditor and customer lawsuits, as well as bankruptcy.
Going into your first meeting with a business law attorney, you should think about your personal financial goals as well as your business goals to determine the best structure for your business.
2. What Do I Need to Include in My Operating Agreement and Bylaws?
After choosing a structure for your new business, you will need to create some guidelines for how your business will operate in the form of either corporate bylaws or an operating agreement (used with an LLC).
Bylaws and operating agreements provide the mechanism for how business decisions will be made, how ownership changes will be handled, how company stock is issued, and how the business will be managed on a day-to-day basis.
When meeting with a business attorney, keep in mind how you want to manage and run your business, and who will be actively involved in its day-to-day operations.
3. What Contracts Do I Need?
In addition to forming a legal entity for your business, you can mitigate business risks by creating and using well-written contracts.
Contracts should describe the rights and responsibilities of each party signing the agreement. Contracts ensure that your business is paid for its services or products, help you navigate any disputes that arise, and set forth what will happen if one party to the contract doesn’t fulfill its obligations. Depending on what kind of business you run, you may need contracts to facilitate routine transactions, protect confidential information, and appropriately describe employment relationships.
When meeting with a business attorney, ask what kind of contracts your business will need. And if you are already considering entering into a contract on behalf of your business, you should have a lawyer review the terms before signing.
4. Is My Business Name Available for Registration?
You may already have a name for your business (or at least a few ideas). It can be easy to become attached to a name, but you should consider legal issues before you hang your sign on the front door.
North Carolina has rules that govern names that new businesses can use. Most importantly, you cannot choose a business name that is already in use in North Carolina. In addition, you will want to avoid using a business name that might infringe on a federally-registered trademark.
A business attorney should be able to help you determine whether a business name is available for you to use, as well as advise you on the risks of possible trademark infringement.
5. What Do I Need In Order To Exit My Business?
While it may seem crazy to think about your business exit plan when you are just starting a business, a good business attorney will help you plan for the full life cycle of your business.
Business succession planning describes a series of financial decisions about who will take over your business when you transition ownership. Succession planning may cover selling your business interest to a co-owner, passing ownership to an heir upon death, selling your business to an employee, or selling your business to a third party.
When meeting with a business law attorney, it is important to ask about business succession planning – even in the first meeting.
Working With A North Carolina Business Attorney
As you start your business, it is advisable to meet with an experienced North Carolina business attorney to plan, prepare, and execute legal strategies that will protect your and your business. If you have questions about your new business, contact Rountree Losee today to schedule an initial business planning consultation.