What is a Business Formation Attorney?
A business formation attorney provides legal assistance to company owners as they form and execute their businesses. In addition, business formation attorneys handle legal issues on taxes, registration, and liability protection.
Read on to learn what services a business formation attorney can provide when founding your business and how ContractsCounsel can connect you with an attorney meeting your needs.
Here is an article to learn more about a business formation attorney.
What Role Does an Attorney Play in Helping Form a Business?
Business formation lawyers provide businesses with the assurance of a solid foundation. Minimizing errors in the early stages of business formation allow the business to focus on operations.
As a business lawyer, hiring a lawyer in the starting stages of your company can be an advantage. Here are some of the roles of a business formation attorney.
- Structure. A business lawyer is familiar with the different types of legal systems your business might be able to take on. Then, based on your company’s needs, they’ll recommend different structures that will give you control, tax advantages, and fundraising incentives to meet your needs.
- Drafting. You don’t have to worry about business contracts. A lawyer allows you to organize the agreements required to form your business. Proper drafting can ensure you are protected in case of an ownership dispute.
- Strategic Decisions. Aside from knowing legal standing, your business attorney can make suggestions your business might face from financial and publicity areas. Forming a business requires strategic thinking, and a lawyer will provide you with perspective and risk management expertise.
- Connections. Hiring a business lawyer means expanding your network. They know many investors and related parties that might suit your needs. A well-reputable lawyer buys your company credibility for business relations and can assist in providing your business with the trust of partners and investors.
- Peace of mind. Securing funding for a business is a full-time job. A business owner needs to spend energy crafting the business rather than looking at the fine print. Having a lawyer means you can delegate the necessary time to understand the requirements of the state and federal laws to run your business. Another thing your lawyer can do is to educate you and your employees on the legal aspects of your business. This way, everyone avoids making mistakes that can destroy your business before it’s even begun.
- Protection. Your lawyer can protect you from potential legal cases against you. For example, they can point out which brand names or business taglines are available by running basic searches.Similarly, they can protect your rights from being violated. For instance, your lawyer can help you create a patent for an idea that is yours or help you copyright your business logo.
Here is an article describing the value of business formation attorneys.
What Is Business Formation?
Business formation revolves around the legal structure your business will take on. The area involves defining how you make profits, how you are taxed, what your liabilities are, and what requirements are needed for government registration.
Here is an article describing business formation.
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Types of Entities a Business Can Form
There are different business entity types to choose from:
- Sole proprietorship. In sole proprietorships, the business solely owns and is responsible for the decisions of the business. You are liable for all business problems incurred, which means that your personal assets can be used to pay debt/legal actions/bankruptcy. You pay your profit’s taxes through your individual income tax because you and your business are taxed as one entity.
- Partnerships. In a partnership, there is usually a general partner and a limited partner who work together. A general partner makes the business decisions, but their personal assets will be used in case of debt or bankruptcy. A limited partner only invests capital and has no say in running the business. However, their assets are protected from any problems incurred in the business. In a partnership, each partner pays their profit taxes on their personal income tax.
- Limited Liability Company. An LLC, or a limited liability company, is owned by members who make business decisions together. Each member's personal assets are protected in case other members incur issues like debt, bankruptcy, or legal action. Like partnerships, each member pays profit taxes through their individual income tax.
- Corporation. Shareholders own corporations. Shareholders’ assets are protected from liability; the corporation’s assets will be used instead. In an S Corp, each shareholder pays their profit taxes on their personal income tax. The corporation is treated as a separate entity in a C Corp and taxed. There are non-profit corporations that shareholders do not own. Instead, they are overseen by a board of trustees. Unlike typical corporations that are made for profit, non-profits are founded to serve the public. Non-profits receive a tax break as a result.
Here is an article about types of business formation.
What Does a Business Formation Attorney Do?
Business formation attorneys can offer their services through the following:
- Defining and explaining the different types of business formations
- Advising on which formation best suits your business goals
- Detailing information on your tax responsibilities, liabilities, and business operation legalities
- Assessing the availability of business entity names for you to choose from
- Reserving your chosen business name in the Secretary of State until you are set for incorporation
- Drafting your company bylaws, incorporation documents, contracts, and agreements
- Drafting and reviewing your business plan for funding purposes
- Obtaining incorporation permits and licenses from federal and state levels
Here is an article describing what a business formation attorney does.
Do I Need a Lawyer for Business Formation?
Before operating your business can even be possible, there is the harrowing task of registering your business. Hiring business lawyers can ease this process for you. They can do the technical work, so you have more time to focus on your business’s goals and needs.
Here is an article about business formation attorneys and their roles.
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