Starting a new business venture can be both very exciting and very stressful. It is a lot of work and there are a multitude of decisions that need to be made. Decisions such as what kind of business structure best reflects your goals, questions of ownership and equity if there are multiple founders, questions about how best to ensure intellectual property is protected, and questions surrounding the management of a good relationship with government in regard to appropriate taxation.
One of the more important decisions to be made at the onset of a new venture is choosing the right corporate lawyer to guide you through the formation of your business and beyond. Seeking legal guidance from a knowledgeable, trusted lawyer early on, will help you anticipate and avoid any potential future legal issues. Your Legal Sherpa® at Yeti Law has the expertise and experience to make the formation of your business venture as seamless as possible. We will work closely with you in determining your strengths as well as your potential vulnerabilities. At Yeti Law we share your entrepreneurial passion and we are dedicated to seeing you succeed.
The type of business structure that suits your needs will be one of the first decisions you’ll need to make. Your Legal Sherpa® will be there to walk you through the pros and cons of the various structure options:
- Sole Proprietorship. This is a quick, inexpensive, and relatively easy way to launch a business venture. A sole proprietorship directs all control and profit to the individual proprietor. It does carry significant risk however, as all liability is also directed at the proprietor.
- Partnership is an arrangement in which two or more individuals or corporations share the profits and liabilities of a business venture. Like a sole proprietorship, partnerships are fairly easy to start up.
- Limited Partnerships. These are tiered partnerships involving one or more general partner(s) plus the addition of further limited partners. More complex and less common, a limited partnership allows for general partners to control day-to-day operations, though they are exposed to some liability, while limited partners abstain from day-to-day, and are protected from liability.
- LLCs and Corporations.This form of business structure is the most complex and costly option, but provides the most protection from liability. A corporation will be more closely regulated and comes with more requirements that must be met, but it can be better suited for long-term growth.
- Co-operatives. While uncommon, this structure affords some protection from liability, and offers members some democratic control.
Agreements for the Founders to avoid Future Disagreements
It’s always advisable for the founders of a new business to establish a formal agreement early on, in the event that issues or disagreements arise once the business has been established. Ideally, a legal agreement should be treated as the backup position, for the protection of the founders, and not necessarily the only position.
Disagreement between founders isn’t the only possible scenario likely to impact the viability of the business venture. It forms one third of a trinity of serious issues that can befall a business venture, the so-called “3 D’s” of setting up a business:
These factors can be destructive to any business. It’s important for anyone entering into a new business to recognize these potential pitfalls, and to put into place an appropriate contingency to deal with these issues should they arise. Seeking support from an experienced firm like Yeti Law should be one of the first steps you take in your new venture.