Many businesses are started without taking all the necessary steps to ensure that the owners have protected themselves and the business. The two issues I see most often are concerns over personal liability and the loss of one or more of the owners.
First, personal liability protection. Many people know that they need to file documents with the Secretary of State’s office to start a business. But, depending on the business type and your individual circumstances, there may be additional requirements that a business attorney can help you navigate. Properly incorporating a business limits the personal liability of the owners, which is great in theory. However, if you stop after filing with the Secretary of State your protection may still be limited.
Second, what if the business loses an owner? Many businesses have multiple owners, whether you call them partners, shareholders, or members, and no plan for what will happen if one of the owners is unable to continue in the business for any reason. Will you be able to work with your partner’s spouse or children? Will they have any interest in working in the business? What if you and your partner have a falling out and cannot work together anymore? How will you determine the value of the business? Can your partner sell their ownership to anyone they want? These are questions that a business attorney can help you answer now, while the business is stable, rather than later through expensive litigation.
If you are considering starting a business, it is important that you take some time to speak with an attorney who is experienced working with startups to guide you through the requirements to do so properly. It may cost additional money now, but it could save you significantly more in the future.