The prospect of starting a business is an exciting one, but it also comes with an inherent amount of risk.
Identifying these risks and working specifically with an attorney from the moment you establish your company can make it easier to address problems as they arise. What follows are several of the most important things you need to keep in mind about entrepreneurship and its intersection with the law when starting a business.
The Right Type of Formation Has a Significant Impact On Your Business
Starting a business means that you must decide on the type of legal formation necessary. This is a critical decision that will influence not just your future structure, but also how the company is managed and taxed. There are several different types of formations that are quite common, including sole proprietorship, non-profit partnership, corporation to limited liability company. If you have not yet legally formed the business, you will want to consider issues such as:
The types of legal formations available within your state
Each individual’s personal investment situation
The risk level of the business
Your personal liability for legal actions and debts
Determining the costs linked to each type of formation
Planning for business and personal income tax issues
Your Exit Plan
It might seem too early at the outset of your business venture to think about leaving the company in the future. However, this is something that you cannot afford to neglect. Important documents may need to be drafted during the formation stage of the business, such as a buy/sell agreement, which will articulate what other individuals are able to do in the event that you become incapacitated or pass away. This enables others to step into management or ownership role of the company if you are no longer able to do it. Failing to have a business succession plan in place could prove catastrophic for your company and this why it is strongly recommended that you have a plan prepared.
You Need the Right Types and Amount of Insurance
As is mentioned above, running a business is all about managing risk. You need to be aware of all the potential risks that your company might face and the appropriate ways to minimize these. One of the most important ways to do this is with insurance. There are many different types of insurance policies including umbrella policies that have numerous different types of claims that may fall under them. Common types of insurance for businesses include errors and omissions insurance, general liability insurance and others. Having this in place can make things much easier in the event that a claim arises. Sudden changes in the business that were unexpected could lead to financial costs and aggravation for the owners.
Understanding Your Intellectual Property Rights
Every business has intellectual property that has the potential to become very valuable. Some of the issues may include how patents can drive revenue from your inventions, how copywriters can ensure that only you profit from the original work and how trademarks can increase your business’ profits as well as your brand value. It is essential to protect the inherent value in your intellectual property as soon as possible. As you evolve and have new business relationships this is vital as well.
Contracts Are Key
The standard form of agreement across the business world is contracts. It matters not just that you have a document in place, but that you have a document that works specifically for you. Your contract needs to consider all potential risks and protect you as much as possible.
Does Your Homeowners Insurance Provide Adequate Coverage?
Your home is likely your greatest asset, which is why it is so important to adequately protect it. Homeowners insurance protects you from the financial costs of unforeseen losses, such as theft, fire, and natural disasters, by helping you rebuild and replace possessions that were lost While the definition of “adequate” coverage depends upon a […]
Understanding the Importance of a Non-Contingent Offer
Making a non-contingent offer can dramatically increase your chances of securing a real estate transaction, particularly in competitive markets like New York City. However, buyers should understand that waiving contingencies, including those related to financing, or appraisals, also comes with significant risks. Determining your best strategy requires careful analysis of the property, the market, and […]
Fred D. Zemel Appointed Chair of Strategic Planning at Scarinci & Hollenbeck, LLC
Business Transactional Attorney Zemel to Spearhead Strategic Initiatives for Continued Growth and Innovation Little Falls, NJ – February 21, 2025 – Scarinci & Hollenbeck, LLC is pleased to announce that Partner Fred D. Zemel has been named Chair of the firm’s Strategic Planning Committee. In this role, Mr. Zemel will lead the committee in identifying, […]
Novation Agreement Process: Step-by-Step Guide for Businesses
Big changes sometimes occur during the life cycle of a contract. Cancelling a contract outright can be bad for your reputation and your bottom line. Businesses need to know how to best address a change in circumstances, while also protecting their legal rights. One option is to transfer the “benefits and the burdens” of a […]
What Is a Trade Secret? Key Elements and Legal Protections Explained
What is a trade secret and why you you protect them? Technology has made trade secret theft even easier and more prevalent. In fact, businesses lose billions of dollars every year due to trade secret theft committed by employees, competitors, and even foreign governments. But what is a trade secret? And how do you protect […]
What Is Title Insurance? Safeguarding Against Title Defects
If you are considering the purchase of a property, you may wonder — what is title insurance, do I need it, and why do I need it? Even seasoned property owners may question if the added expense and extra paperwork is really necessary, especially considering that people and entities insured by title insurance make fewer […]
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Six Legal Items Entrepreneurs Should Be Aware of When Starting a Business
Author: Scarinci Hollenbeck, LLC
The prospect of starting a business is an exciting one, but it also comes with an inherent amount of risk.
Identifying these risks and working specifically with an attorney from the moment you establish your company can make it easier to address problems as they arise. What follows are several of the most important things you need to keep in mind about entrepreneurship and its intersection with the law when starting a business.
The Right Type of Formation Has a Significant Impact On Your Business
Starting a business means that you must decide on the type of legal formation necessary. This is a critical decision that will influence not just your future structure, but also how the company is managed and taxed. There are several different types of formations that are quite common, including sole proprietorship, non-profit partnership, corporation to limited liability company. If you have not yet legally formed the business, you will want to consider issues such as:
The types of legal formations available within your state
Each individual’s personal investment situation
The risk level of the business
Your personal liability for legal actions and debts
Determining the costs linked to each type of formation
Planning for business and personal income tax issues
Your Exit Plan
It might seem too early at the outset of your business venture to think about leaving the company in the future. However, this is something that you cannot afford to neglect. Important documents may need to be drafted during the formation stage of the business, such as a buy/sell agreement, which will articulate what other individuals are able to do in the event that you become incapacitated or pass away. This enables others to step into management or ownership role of the company if you are no longer able to do it. Failing to have a business succession plan in place could prove catastrophic for your company and this why it is strongly recommended that you have a plan prepared.
You Need the Right Types and Amount of Insurance
As is mentioned above, running a business is all about managing risk. You need to be aware of all the potential risks that your company might face and the appropriate ways to minimize these. One of the most important ways to do this is with insurance. There are many different types of insurance policies including umbrella policies that have numerous different types of claims that may fall under them. Common types of insurance for businesses include errors and omissions insurance, general liability insurance and others. Having this in place can make things much easier in the event that a claim arises. Sudden changes in the business that were unexpected could lead to financial costs and aggravation for the owners.
Understanding Your Intellectual Property Rights
Every business has intellectual property that has the potential to become very valuable. Some of the issues may include how patents can drive revenue from your inventions, how copywriters can ensure that only you profit from the original work and how trademarks can increase your business’ profits as well as your brand value. It is essential to protect the inherent value in your intellectual property as soon as possible. As you evolve and have new business relationships this is vital as well.
Contracts Are Key
The standard form of agreement across the business world is contracts. It matters not just that you have a document in place, but that you have a document that works specifically for you. Your contract needs to consider all potential risks and protect you as much as possible.
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