04. Business Formation
Arguably the most important part of operating a business, selecting and forming the appropriate legal entity can protect you from personal liability and provide important tax consequences and benefits. By establishing concrete and agreed-upon guidelines for how the owners will conduct themselves and manage the business, future disputes can be mitigated, and all parties can make decisions confidently and with certainty.
Selecting a Legal Entity
Depending on your objectives, different legal entities may better suite your needs. Each State has their own recognized legal entities and laws that govern the formation, operation, and closure of each. Some entities provide limitation of liability to its owners, while others do not; some allow for the specialized management arrangements, while others do not; some have formal operating requirements while others may be operated informally; some even require that all owners be licensed members of a particular profession. In addition to the benefits and burdens of a particular entity as identified by the State, different entities may be subject to special treatment under the U.S. Tax Code. We advise clients on the various entities that may be available to accomplish particular legal objectives.
Drafting a Governing Document
In most circumstances drafting a governing document for your business is advisable, if not required. A governing document is like a contract between the owners of the business agreeing how the business will be managed, how profits and losses will be allocated among owners, how disputes will be resolved, how ownership interests will be calculated and valued, how the business will be liquidated, and potentially a whole host of other issues. Many lenders and investors look to the governing document to determine how their interests will be affected before choosing to provide capital or credit to the business. To that end, a well-crafted governing document can convey a sense of professionalism, forethought, and organization that can help seal the deal. We draft a standard governing document for your business, and can tailor it to meet a wide array of complex governance arrangements.
Employer Identification Number (Tax ID)
A Federal Employer Identification Number, known as an EIN, FEIN, or Tax ID, is a special number assigned to your business by the IRS that is used in a variety of important functions, such as filing federal tax returns and obtaining bank accounts. Different states may also require your business obtain special identifying numbers for use in filing state tax returns. We help you obtain your business' required Tax IDs.
Many areas of business require you to obtain one or several state and/or federal licenses before you are legally allowed to operate. For example, a business that seeks to sell beer, wine, or liquor is required to obtain a liquor license, which varies based on the type of establishment and the manner in which the alcohol will be sold. Searching for and submitting applications for licenses pertaining to your business model is often a time-consuming and tedious process. We research what licenses your business needs to be compliant with state and local regulatory agencies, and we submit applications for the licenses on your behalf.
Drafting a Client Contract Template
One of the major sources of liability for a business is its clients. No matter what type of business you seek to operate, in the event of a dispute, having a reliable and all-encompassing contract with your clients protects your business and its owners, identifies clearly the duties and obligations between the parties, and establishes dispute resolution procedures on your terms. Not having a contract, or having a poorly drafted or ambiguous agreement, can lead to costly litigation. We draft a customer contract for use with your clients that can be used over and over again.
If your business will require regular legal services, inquire about hiring our firm as your in-house counsel. Special rates apply.
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Request a Consultation
The Anthony A. Garcia Law Firm does not charge an initial consultation fee to review the particulars of your business needs. Simply send us a written description of your business and desired legal outcomes and contact us to schedule a free telephonic or video-conference consultation.