Importance of an Attorney When Setting Up a Business
Starting a business can be an exciting proposition, but it is important to approach this in the right way. New business owners need to ensure that they form an entity that protects them from legal liabilities and high taxes. Depending on the type of business, it may be a good idea to incorporate. In contrast, some enterprises might be able to justify a pass-through entity that minimizes overall taxes. This will take a look at why is important to work with a professional attorney when founding a new business.
1. Minimizing Taxes
A professional attorney can set up an enterprise in a way that is optimally efficient for taxes. If business owners are not careful, they could be subject to two layers of income taxation. Although this structure is unfortunately necessary for some enterprises, taxes can still be minimized to some extent. In the long run, income taxes can cost business owners millions of dollars. Therefore, new business owners can earn a high return on investment by working with a professional attorney.
2. Avoiding Legal Liability
It is important for business owners to adequately protect themselves from legal liabilities that could arise in the event of business failure. While no new business owner wants to contemplate failure, reasonable efforts should still be made to minimize exposure to liability. Without doing this, business owners could find themselves liable for debts incurred by the business itself. By working with an attorney, an entity can be set up that truly protects business owners from potential liabilities.
3. Preparing for the Future
Many business owners make the mistake of founding a business themselves, only to regret this later down the road. By working with an attorney from the start, business owners can be entirely assured that they are doing everything correctly. Since there are thousands of laws that can apply to new businesses, it is critical to work with an individual who fully understands commercial codes. An attorney can also provide legal advice to ensure that new business owners are doing the most that they can to stay compliant with prevailing laws.
4. Developing Partnership Agreements
Filing forms with the state is the first step, but there is more that needs to be done. Business owners that are working with a partner will need to develop a partnership agreement. To ensure that both parties are protected, it is advisable for these contracts to be drafted with the assistance of a licensed attorney. In the event of a dispute, this can ensure that the contract is legally enforceable in the court of law.