Common Questions About Business Formation Answered

Starting a business can feel like a leap of faith; however, one of the best ways to set a business up for success is by starting the process with a business lawyer area businesses recommend. Although companies can be incredibly successful, statistically speaking, nearly 20% of all businesses fail within their first two years of operation. Only 25% of new businesses last more than 15 years. Owning a business is not for the faint of heart; business owners will pour their money, time, and hard work into the success of their business. Why not set up the company you have worked so hard to build for success by consulting with a lawyer from Eric Lindh Foster Law, LLC? Our team can work closely with business owners to counsel and answer critical questions regarding the business formation process, ultimately setting the business up for success. 

What is the first step toward starting a business?

Before formation, business owners must take several steps before opening their doors. Once a person has a business idea, they must set it up for success by conducting market research. Market research is imperative because it helps ensure that the business idea is viable and has a customer base in the area where you will be setting up shop. In addition, market research helps a newly developed business compete with others in the market. Following market research, it’s crucial to create a comprehensive business plan that outlines how the company will operate and grow in future years. Our business lawyer New Haven, CT entrepreneurs, recommend can share that a business plan can also help to attract people who may be interested in investing in the company you are forming and ultimately help to fund the business. 

Why is choosing an entity important?

When forming a business, choosing an entity is one of the most critical steps that can be taken. The type of business formed will dictate how the business is run, who will hold liability, and how taxes will be paid. When a person does not take steps to choose an entity and form their business correctly, they leave their business vulnerable to risks. 

What types of entities are the most common?

There are several entities that an entrepreneur can choose from when forming a business. Each comes with unique advantages that business owners should carefully consider. While some are more common than others, consulting with a lawyer will be able to carefully assess a business’s legal situation and determine the most appropriate type of formation. Some of the most common types of entities include:

• Sole Proprietorship
• Partnership
• Limited Liability Company
• C-Corp
• S-Corp

What should be considered when choosing a business entity?

Determining how a business will be structured is not a decision that should be taken lightly. Choosing an entity that best meets the business owner’s needs and business goals will be imperative. Several keys components must be considered when forming a business, including: 

• Tax Treatment
• Ownership Control
• Dissolution of Ownership
• Liability
• Business Succession

Why should a lawyer be consulted for business formation purposes?

Business owners should consider enlisting help from a lawyer for several reasons. Working with a business lawyer is critical in ensuring the business is formed correctly and ready to operate following state and federal laws. Running a business involves far more than a good idea. Business owners will need to ensure that risk is mitigated, contracts are drafted, the proper operational manuals are in place, and they are prepared to have employees. Failure to do so could leave a business at risk for many exposures. 

To successfully form a business, entrepreneurs must take care by developing a business plan, determining the proper business formation, and hiring an experienced business lawyer. Our team can help provide the counsel business owners require to ensure success. Begin the process of safeguarding the business you have worked so hard to build by contacting our team at Eric Lindh Foster Law, LLC.