Setting Up a New Business: Key Steps for Long-Term Success

Decided to start a new business? That’s great news! Best wishes for a successful venture. But setting up your new business for success means much more than just generating robust sales and keeping expenses low. There are legal documents, policies, and agreements you will need to have in place from the very beginning – not just for government compliance purposes – but also to protect yourself, your assets, and your family. Whether this business is your first big idea or you’re a seasoned entrepreneur, you’ll want to pay attention to the following legal basics before opening up shop.

Before going on that first sales call, step one is choosing how to organize and register your company. Most new businesses register as a limited liability company (LLC) or a corporation (Inc.). Both entity types provide personal liability and safeguard the assets of the owners, but you should consult with your attorney and your accountant to determine which entity type makes the most sense for your company and particular circumstances. Either way, you also will need to separate your business activities from your personal activities, so that subsequent legal issues will affect the company only, and not you as an individual.

If you expect to have co-owners, partners, or investors, consider using a separate agreement to delineate each partner’s individual responsibilities and to confirm the percentage of ownership and entitlement to profits for each partner. Additionally, although you may not want to think about it at the exciting start of your business, a buy-sell agreement should be crafted to map out how assets and parts of the business would be divided if a co-owner chooses to leave, or passes away. Think of it as a pre-nuptial agreement for your company. This document will keep you and your family from missing out on your share of the business should anything unfortunate or unforeseen happen.

Many day-to-day business activities involve dealing with other companies and individuals, both inside and outside of your company. When interacting with clients, consider using a sales agreement for one-time engagements or a retainer agreement for ongoing relationships. If you will be dealing with outside vendors (as most companies do), signed agreements will reduce any problems that might arise in the course of doing business. Without critical documents outlining these relationships, there likely will be misunderstandings, at best – or litigation, at worst – when disputes inevitably arise, sooner or later.

Starting a business is much more involved than merely having business cards printed and hanging out a shingle. The best way to deal with the complexity of business ownership – and to avoid headaches later – is to have experienced legal counsel handle the agreements, government filings, and other documentation in order to best protect you, your family, and your business from potential harm before it occurs. But that’s not all. You need a strategic advisor who understands your goals and company culture, who will hold your hand as much or as little as you are comfortable with, and who is ALWAYS on your side.