Helping people set up their first business is one of the most important and enjoyable assignments at Tilton LawTM. It can be challenging at times since there are so many considerations before the business can become operational. Meeting those challenges in a timely and affordable way is our goal.
This brief overview is only intended to cover a few of the many issues that need to be addressed before a new business can be established.
Form of Ownership
You may operate your business on your own as a sole proprietor without establishing an entity such as a corporation or limited liability company. More often new business owners will set up an entity. The particular form may depend in part upon whether there will be other owners, whether there are liability or tax issues, and the initial and operational expenses of a particular form of ownership. All these issues should be discussed with your attorney and accountant prior to starting any business activity.
Business risk can be mitigated by purchasing insurance and in some cases is even required. It is always possible that someone may allege that they were harmed in some way by your business. Having chosen an entity such as a corporation or limited liability company will help but may not be a perfect solution. So having insurance to cover such things as attorney fees incurred in defending yourself or your business in court can keep you out of financial trouble.
Insurance is also necessary if you have employees for such matters such as workers compensation. There are also mandatory expenses for state required and administered unemployment insurance.
It is a very rare business owner who can comply with all of the state and federal tax compliance issues without the benefit of an accountant. At Tilton Law we do not prepare tax returns. Tax compliance matters are only addressed in conjunction with your accountant. We do not accept new business clients who do not retain an accountant. If asked we will make suggestions and referrals.
Your business may require a license from a unit of government such as the State of Illinois, a federal agency or a certain county or municipality. Do not start any business without making sure that you are properly licensed to do so.
The use of names, materials and marks may be regulated by copyright and trademark law. Do not go to the expense of ordering signs, business cards or other materials without making sure that you are not prohibited from using them in your business.
For many people, a line of credit, business loan or other supply of funds may be necessary. It is important to estimate how much money will be required for some certain period (such as one year) from the date of the start of your business. Be realistic about how much money you might need. It is not uncommon for businesses started by good people to fail simply because there was not enough money available to last until the business got off the ground. This is another area in which your lawyer and accountant can be of help, along with your banker.