1. Do I Need a Legal Entity?
The answer, of course, is yes! Operating your business as a sole proprietorship (which is what you have if you don’t do anything) is risky! Anything that happens in the course of the business flows through to you and your personal assets. This means that if a court finds that you did something to hurt a client, for example, after your insurance (if you have any and it is covered) pays, and after your business assets pay (if the amount owed is more than the insurance, if any), then anything remaining comes out of your personal bank account. This can be out of your savings – for retirement, for education, for a family vacation. It can be in the form of losing your home. A business loss could potentially be devastating.
A legal entity is a way of putting a firewall between your assets and the losses of the business. Most entrepreneurs choose between a limited liability company and a corporation, most likely one with a Subchapter-S election with the IRS. For professionals, there is the professional services limited liability company and the professional corporation. Each entity has different requirements to be legally formed. Your business formation attorney can guide you through the differences and help you make the right choice.
2. How Do I Name My Business?
Naming your business is one of the most important things you do – and one of the most fun! Your name is your brand. It’s how people will find and remember you. It’s your calling card – quite literally, as it’s on your business card.
While you’re naming your business you will need to keep in mind some important rules. New York State requires that certain entity types have certain words in them – for example, “Inc.” or “Corp” or “Corporation” for a corporation. The state also requires that if you want to use a list of special words in your company name, you need permission – for example, “education” or “attorney.”
Besides those rules, you want to make sure that your name is unique. Just because a name is available for use in New York doesn’t mean that it might be precluded due to someone’s existing trademark.
Your business formation attorney will know what you can and cannot use in your name, and will help ensure that you don’t run afoul of someone else’s intellectual property.
3. How Do I Protect My Intellectual Property?
One of the reasons you are going into business for yourself is you have special knowledge about the market, the services, the products, and you intend to use that knowledge to make the business a success. Clearly, you need to protect the confidential information and trade secrets that you have.
Often a new business will protect their name and/or logo by filing for trademark protection. This prevents someone else from setting up shop a couple doors down from you with the same name once you become successful. It prevents knock-off products called by the same thing to capitalize on your hard work in marketing.
Some businesses are able to obtain patents because they have a unique product that is unlike any other before it. To some extent, all businesses have trade secrets – whether it be the confidential marketing plan, way of doing business, or the like.
Your business formation lawyer should know how to protect your intellectual property from third parties, including the employees you will be hiring one day.
4. How Do I Get Money To Start My Business?
Starting a business, as everyone knows, requires capital. There are the state filing fees for forming the entity, payments to attorneys and accountants to help you set up the business, and the supplies you’ll need to get started – from a website to a printer to the stapler on your desk. However, where to obtain the capital can be a major concern for people.
There are several options for gaining the capital to start your small business. You can take out a loan, solicit investors, or even put up the capital yourself. However, each one of these is a significant commitment and serious decision, so it’s best to talk to your business formation lawyer about what will work best for you.
5. Can I Do This On My Own?
Absolutely. There are millions of small businesses that are thriving in the United States. In fact, small businesses account for half of the jobs in our country. Clearly, many people are making it work – not only for themselves but for their employees.
Of course, to be a successful business owner, you need guts – because it does take a lot to launch a business. You need heart – because you have to pour so much into the business to be successful. It takes brains – because you need to become a lifelong learner and obtain any skills you may be lacking already.
Your business formation attorney should be well connected in the community and be able to help you find the resources you need to succeed. Talk to your attorney about your concerns and let them help you find the resources needed. The right attorney can help you make sure your business has the best possible start it can!