Business Formation Attorney in New York, New York

Entrepreneurs are thinkers, dreamers, and visionaries. Their ideas solve problems, fulfill needs, and find empty niches. They look past the mundane and envision where they can take a business in the future.

As the saying goes, you must learn to walk before you can run, and that can be difficult for potential business owners ready to spread their wings. However, the fact is that before you run with your idea, you will have to choose a structure for your business. It will need to be congruent with your mission and goals. Choosing the wrong one, or executing it improperly, can stop your dream before you ever really get started.

At Adelman Law, P.C., we are dedicated to supporting entrepreneurs in business formation and beyond. We discuss your ideas and goals, ask tough questions, and help you find the best business formation fit for you. We are committed to setting you up for success, not failure. 

If you’re an entrepreneur considering a new business opportunity, we are here to help you choose a business structure that aligns with your goals.   

What Are the Options for Business Structures?

There are four general types of business structures you should consider for your new enterprise. We can walk you through them and discuss how each would benefit or not benefit you and your business. Business structure implications involve protecting your personal assets and liabilities, tax considerations, governing of the business, and more. 

A limited liability company (LLC) is well-suited if your business will have no or few employees. If you just plan to be a consultant, you may be wondering why you need any type of business structure at all. You do because you need to protect your personal assets from liability should you be sued or suffer business losses. Moreover, you will want to protect your profits from taxation at corporate rates. An LLC provides these protections.

Sole proprietorships require no organizational filing, but your local government may require you to purchase a business license to conduct business. These are “doing business as” (DBA) structures. You pay personal income taxes on profits, absorb losses, and have no protection against liability. If your business is sued or fails while you owe money to vendors, suppliers, or others, your personal assets are on the line. 

Partnerships need to have a thorough partnership agreement signed by all partners. Risk is assumed and profits are shared by the partners who pay personal income tax on that income. Partners’ personal assets are not protected should you be sued or in the event the business fails.  

Corporations are formal entities with formal filing requirements. There are two key types of corporations. C-corporations absorb profits and losses and pay taxes at corporate rates, and shareholders pay personal income tax on the dividends they receive. In an S-corporation, profits and losses pass to the owners of the corporation without any entity level tax. 

What Legal Documents Do I Need to Start My Business?

Establishing business contracts is the next step you will need to take after you form the business. The type of company you launch will determine what contracts you need. There are employment contracts, non-disclosure, and non-compete agreements, vendor and supplier contracts, sales and customer agreements, guarantees and warranties, and many more. The basic role of each contract you execute is to provide a legally-binding agreement that gives you legal recourse to enforce or protect you if a dispute arises. 

Even if you form an LLC as a self-employed consultant, you will need agreements or memoranda of understanding entered into by you and your clients. These specify the scope of work, deliverables, and payment for services rendered. 

A contract is not a contract unless it is legally enforceable. As such, it needs to be written to comply with laws and regulations, close loopholes, and hold up in court if challenged.  

What Are Other Business Start-Up Considerations?

The list of steps you need to take to launch your enterprise can be exhaustive, so work with an experienced business law attorney to make sure you cover all bases. If you are in an industry or business with unique rules and regulations, work with an attorney who has experience in that industry. 

Some business structures, such as an LLC, do not require filing for a state or federal tax identification number. Instead, you will use your Social Security number. However, if your company does require a unique number, you will want to make sure you get one before you begin doing business.  

Your company may also be subject to certain licensing requirements or to obtaining certain permits. Again, if you fail to obtain the proper business licenses and permits, your business will be penalized, perhaps irrevocably.  

Finally, don’t overlook the need for business insurance. You may need business operations insurance, errors and omissions insurance, general liability insurance, directors and officers insurance, auto insurance for company vehicles, workers’ compensation coverage, and property or renter’s insurance, to name a few.