One of the most important first decisions you’ll make as a business owner is selecting the business structure. If you and your attorney determine that a corporation is the correct business structure, there are some procedures to follow in order to correctly file the necessary paperwork, and having a small business attorney to help can end up saving you time and money in the long run.
What is a Business Corporation?
A corporation is a legal entity independent from its owners. Depending on whether you are taxed as an s-corporation or a c-corporation, corporations may have profits and may owe taxes. Corporations taxed as s-corporations and c-corporations typically give the owners (shareholders) limited liability protection and the corporation is held legally responsible for its actions. While corporations provide protection from personal liability for their owners, corporate record-keeping, operations, and reporting must be more meticulous. Most businesses that will need to raise capital or that plan to “go public” benefit from incorporating.
Benefits of Incorporation
There are several advantages to forming your business as a corporation:
A corporation minimizes your personal liability and may provide you with tax benefits.
Health and life insurance premiums may be deducted from your company’s gross income on the company’s tax return.
Incorporating also means that people will treat your firm seriously, and you’ll be able to lay the groundwork for future growth.
You may raise cash for your company by selling shares.
If you decide to sell your company, there may be advantages to being a corporation.
Basic Incorporation Procedures
The process of incorporating your business can vary depending on what state your business operates in, but in general, there are a handful of procedures that apply such as:
Selecting a name for your business and researching whether or not another corporation has registered the name
Preparing article of incorporation
Filing articles of incorporation
Choosing a board of directors
Registering an agent to accept legal documents
Determining whether you want to be taxed as an s-corporation or c-corporation and filing the appropriate documents to be taxed as you determine
Filing to obtain a business license
Obtaining an EIN to tax purposes
Do I Need a Lawyer To Incorporate My Small Business?
It is possible to incorporate your small business without the assistance of a lawyer, but it may not be the best route to take. Legal fees can be an expense that many new business owners don’t want to pay. However, keep in mind that there may be a higher cost to doing it yourself: You put yourself through the tedious process and the risk of making mistakes if you don’t do very thorough research. The paper-filing process isn’t the hard part, but the do-it-yourselfer may not be aware of tax and legal liability issues. Securities regulations might be complicated if you plan to offer shares, even to those that work in the company or close friends and family.
Get Advice Before Incorporating Your Business
The structure you choose for your company has implications for ownership and how the law views your organization. The agreements you make with yourself, the business, and the other owners will have a lasting impact. Consulting with a business attorney who has expertise in creating these documents about your future plans might be the difference between a successful company and one that fails. If you’re ready to form a corporation or you’re still wondering, “do I need a lawyer to incorporate my small business”, contact the Law Offices of E.C Lewis today.
Contracts are legally enforceable agreements that are a part of day-to-day business operations for companies of all sizes. Contracts should not be written or signed haphazardly, especially when your business and livelihood are on the line. It’s critical to understand the legal consequences of what you’re entering into and ensure that the contracts created by your business are legally sound. That is where contract lawyers play an essential role. So what does a contract lawyer do, exactly?
What Does a Contract Lawyer Do?
A contract lawyer’s tasks and responsibilities include contract drafting, contract reviewing, and ensuring the interests of their clients are protected. Contract attorneys are familiar with contract requirements and how to ensure that they will be enforceable. Certain legal features and wording are frequently required in these sorts of contracts. A contract lawyer may assist a corporation or individual in including the terms essential for their commercial requirements, as well as any legal terminology that the individual may not be aware of. A contract lawyer may also be able to recommend a litigation attorney who can represent a client when a contract is breached.
Contracts for Startup Businesses
Starting a business has various components, from developing your initial idea to hiring your first employee, and each stage may present new obstacles. A contract lawyer can assist you in determining which contracts are required between you, your partners, and your company. Even if you are the only proprietor of your company, you may require agreements between you and your company to protect your limited responsibility. Third parties you wish to do business with may demand business agreements in order to move forward as well. A contract lawyer can ensure that the contracts you create and sign are the appropriate ones for your company and needs.
Ongoing Business Contracts
Contracts are a necessary element of running a business. Contracts aid in the development of both your company and your commercial connections. Documents like your Employment and Independent Contractor Agreements, as well as Nondisclosure Agreements, are critical to legal compliance. Because you will use these papers frequently, it is critical that they be done correctly the first time and reviewed annually to ensure that they continue to satisfy your business’s demands and current legal requirements. Master Service Agreements, Vendor Agreements, Lease Agreements, and Manufacturing Agreements are also contracts you may encounter or need to draft during your time as a business owner.
There are some agreements that may need to be reviewed once a year or even less frequently, but if you lapse, you may cause a bit of trouble for yourself. It’s all too easy to forget about your software license agreements, online privacy policies, and website terms of service. A contract attorney will make sure you’ve taken all of the required measures, and if there happens to be a website dispute or software licensing violation, they can refer you to a litigator who can represent you. Intern Agreements and Professional Engagement Agreements are two other types of specialty agreements you could encounter as a small business owner.
How Much Does A Contract Lawyer Cost?
The cost of a contract attorney varies depending on the attorney’s experience and the specifics of the case. While most attorneys charge hourly, you may find some attorneys charge by the contract. Contract attorneys that are drafting or negotiating contracts may cost a different hourly amount than an attorney that does litigation regarding contract breaches. Most attorneys can give you a range of fees for different contract issues so that you have an idea of how much things will cost before you hire an attorney.
Contract Law at the Law Offices of E.C. Lewis
If you have contracts that need to be reviewed, you’re disputing a contract, or need to address a potential breach of contract, don’t hesitate to reach out to schedule a consultation. Elizabeth Lewis is an experienced contract law attorney who continues to help businesses all over the Denver metro area, Colorado, North Carolina, throughout the United States, and internationally with their contract law needs. Schedule online now or call 720-258-6647!
As a small business owner, you must wear a lot of hats! Unfortunately, one of the hats that is difficult to wear is the one involving legal matters. Whether you are just starting a business, are making changes in your current business structure, or are exiting a business, getting small business legal advice can be crucial. In an ideal world, you want to protect all you’ve built as much as you can and avoid any missteps along the way. Use this small business legal checklist to get your legal matters in order to prevent feeling overwhelmed or anxious about missing an important step.
Legal Help for Starting a Business
Starting a business often requires the most attention and legal advice since there are many different things to consider, such as:
Choose Your Business Structure
During business formation, you will need to select from a variety of legal structures for your company. This should be one of the first items on your small business legal checklist. Each type of business provides distinct organizational possibilities, each with its own set of tax and liability concerns. Prior to making a selection, you should extensively examine each legal structure and speak with an attorney and an accountant. These business types include:
Forming Contracts Between Owners
A contract is a legally binding agreement between two or more parties. If you own your business with other parties, it is important to have sound contracts stating the parameters of ownership – you can think of it as a prenup agreement for your business. Contracts are meant to protect your business and resources, as well as your personal assets if they are correctly constructed. Unfortunately, faulty contracts may do the opposite.
Contracts with Third Parties
As a small business owner, you will likely have contracts with customers, vendors, employees, contractors, and other individuals or businesses. While some business owners still rely on handshakes to confirm an agreement, in the legal realm, the one who has everything written down is usually the winner, especially if the terms are clear and concise. Always acquire a written confirmation, especially when the agreement involves the exchange of money or intellectual property.
Legal Help For An Existing Business
Even if you have already been in business for many years, you still may encounter situations where you need legal advice, such as:
Signing A New Lease
Throughout the life of your business, you may lease several different office spaces, whether it is for relocation or an additional location. The laws surrounding a commercial lease vary from state to state. When entering into a commercial lease in Colorado, consider factors such as what is prohibited on the property, how rent is calculated, if the rent will increase over time, and what obligations you have as a renter. Being a commercial renter is extremely different from residential so make sure you know what you are getting into before you sign a commercial lease.
Once your business has been up and running for a while, you may find that it’s time to start hiring employees. Both Colorado and federal employment laws aim to identify and defend the rights of employers and workers in the context of a commercial relationship. The objective is to guarantee that all parties are treated fairly by each other and the courts if required. There are subtle differences between employees and contractors that a small business lawyer can help you sort through.
Legal Help When Ending a Business
The process of exiting, dissolving, or selling a business can be tedious and require consulting with an attorney with experience in this area and matter such as:
Closing a Business Without Selling
Before you can close the doors on a business for good, a lengthy number of processes must be completed. These frequently involve legal procedures that involve the help of a business attorney. In some cases, in addition to the lawyer, an accountant is required to dissolve the firm. While a legal representative can verify that legal paperwork is completed appropriately, an accountant can examine revenue, income, and all outbound transactions to ensure that everything is lawful and that the books are free of any questionable activity. Depending on the reasons why the business is closing, you may also need the help of other professionals which your attorney or accountant can recommend based on your circumstances.
Transferring A Business To A Successor
When the owner or a senior-level partner retires, becomes disabled, or dies, small firms and partnerships without sound succession plans often collapse. Family companies, in particular, require proper succession planning because they must either identify family members who are suited for leadership roles or consider other possibilities outside the family and consider tax implications for transfer of the business to the next generation. The keys to a successful hand-off include planning ahead of time, basing decisions on business needs while also managing family expectations for family businesses, knowing the current state of tax law, and reviewing the plan as conditions change.
Selling Your Business To A New Owner
There are several factors to consider when selling a business, such as the business’s value, what portion of the company will be sold, and when the sale will take place. It is crucial when drawing up a purchase agreement that a business attorney with experience in business sales or acquisitions takes the time to thoroughly review all documents.
Elizabeth Lewis, MS, JD Is Your Denver Small Business Lawyer
Regardless of what stage your business is in, this small business legal checklist should help you identify areas where you may require legal advice. Law Office of E.C. Lewis, P.C. understands that the laws governing these areas are always changing, so even if you’ve run a Denver small business for decades, it’s a good idea to keep in touch with a Colorado business attorney on a regular basis to discuss any recent changes. Schedule a consultation today!
With the start of every new year, home based business owners have an opportunity to reflect on the success of their business. Some home business owners have to think about throwing in the towel, while others have to deal with unexpected growth. If you are planning for growth, you should consider obtaining business development legal advice before you launch plans to obtain new clients and customers for your home based business this year.
Home Business Growth Legal Help
Home business owners wear many hats. The hours can be painfully long as you work to fit it all in; bookkeeping, record keeping, production, marketing. For many small business owners, sales calls are a dreaded chore. People who struggle with finding and closing prospective customers sometimes seek a coach or course to help them overcome their reluctance to sell, but another important component of business development planning is to seek business growth legal help before you implement new sales goals for the year. Why? There are several pitfalls you can avoid by talking to a Colorado small business attorney before you take steps to grow your Colorado home based business. Here are three things that come with growth which require the advice of a small business lawyer:
Independent contractor contract
Review of company documents
The Independent Contractor Contract: Avoiding Liability
The purpose of creating an independent contractor contract between your business and someone who performs work for you is to establish that the worker is not an employee. For many home based business owners, the costs of employing workers is too high, both from a paperwork and planning perspective, and from a tax liability perspective. But a poorly worded independent contractor contract can rob a small business owner of the benefits of working with independent contractors. Furthermore, certain ways of assigning work to an independent contractor can bring into question the validity of his or her independent contractor status.
The penalties for treating employees like independent contractors are severe. A good, local small business lawyer will not only review your independent contractor contracts, she will also ask you to explain how you assign work to your contractors, how they are paid by you, and how you manage their tasks and assignments.
Non-Disclosure Agreements: Protecting Your Business
It may sound like overkill – if you are a small, home based business, why would you need a non-disclosure agreement? Confidentiality or non-disclosure agreements are often associated with new and potential employees. These agreements protect your proprietary information. But small business owners, especially those who consult for clients, can benefit from having new customers sign non-disclosure agreements as well. If you have worked hard to create your business, you don’t want to give it away to a client who may become a competitor. Talk to your Colorado small business attorney about the benefits of having your clients, not just your employees and contractors, sign non-disclosure agreements.
Review Company Documents to Save Money and Heartache
It’s a new year, and you undoubtedly have new business goals. One of the most important things you can do at the start of this year is meet with a Colorado small business lawyer to review company documents. Does your business structure still make sense? Are your non-disclosure and other legal documents still protecting you as originally intended? Are you in compliance with Federal tax rules and Colorado state law? Will you be impacted by any new Colorado or federal business laws this year?
An in-person business planning consultation with a Colorado business attorney will provide you with advice relevant to your Colorado home business that no legal help website can. Talking to a small business lawyer on an annual basis can do as much toward helping business owners succeed in the long-run as a great new product or fantastic sales can in the short-term.
If your home business needs business development legal advice, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Business Lawyer. Phone: 720-258-6647. Email: firstname.lastname@example.org
Contact Us Today
Law Office of E.C. Lewis, P.C. Your Denver Business Attorney
501 S. Cherry Street, Suite 1100 Denver, CO 80246 720-258-6647 Elizabeth.Lewis@eclewis.com
Small businesses come in many sizes, offer different goods and services, and operate out of all sorts of spaces. Some conduct business out of the home while others share rented office space or temporary locations. If you decide that you have outgrown your existing place and are looking for a bigger, more long-term solution, there are things to consider before buying commercial space. A small business attorney will help you with all of your real estate decisions from taxes and insurance to location and protection. This post will discuss how to determine if your small business is ready for the transition to commercial real estate and how to secure the financing you need to make the purchase.
Five Questions Before You Make a Real Estate Investment
What is commercial real estate? Commercial real estate refers to buildings or land intended to generate a profit. It can be divided into several categories, including office buildings, industrial, retail, restaurant, multifamily, undeveloped land, and more. Each type of commercial property is subject to numerous laws – contract, insurance, disclosure, landlord/tenant, and others – as well as Colorado state zoning and land use regulations.
How long have you been in business? You are a well-established business in your neighborhood or district, and you have no plans to leave the area. Perhaps the space you have been renting suits your business, or you have found a great location nearby. Buying seems like a good idea, but even if you have been in business for 10 years, lenders will want to see that you have been profitable for at least the past few years.
What are your future goals for the business? Be sure to align your business plans with your location. If you overestimate how quickly your business will grow, you may find yourself with too much space and a hefty mortgage. If you underestimate the potential success of your business in its new location, you may be unable to make necessary renovations and outgrow the space too soon. These two scenarios could be a big problem if the real estate market is down compared to when you originally purchased the property.
Will you benefit tax-wise from commercial property ownership? If you are a C corporation (C corp) with 40 owners, it may not make as much sense to own the real estate as it does for a mom-n-pop limited liability corporation (LLC) that will benefit more from ownership. Talk with your small business attorney to determine if your business structure is the right one, especially for tax purposes.
Should you change your business structure? The structure of your business will not only affect your tax obligations and liability, but it may also affect your ability to secure financing. As a sole proprietor, you are responsible for all debts and obligations, which is a deterrent to some investors. With an LLC, there is no limit to the number of owners; whereas, an s corporation is limited to 100 owners. C corporations are attractive to venture capitalists because of the unlimited number of owners and because there is no income tax liability. There are several other options for small businesses to secure financing.
Five Ways to Buy Real Estate as a Small Business
Small Business Association (SBA) Loans SBA loans come in two types – the 7 (a) and the CDC/504. The 7(a) is a 90% government guaranteed bank loan, and the CDC/504 is a 50% first loan from a back and a 40% second loan from the government. SBA loans offer fixed interest rates, small down payments, the ability to finance building improvements, and a variety of lending sources. However, there is a lot of paperwork, employment criteria, and strict onsite occupancy rules.
Bank Loans These conventional loans are not as simple as they used to be. There are fewer commercial banks, and even those prefer SBA originated loans because the government backs a percentage of it. If you can afford a larger down payment and are in good standing with your bank, you may secure a loan with less underwriting criteria and more flexibility in repayment.
Seller Financing This is a direct seller to buyer arrangement. When sellers own a building outright, they can offer better interest rates than other lenders. Seller loans are even more flexible because you are dealing with an individual. While they are not as common as they used to be, these loans often entail fewer fees and a lot less paperwork
Third-Party Financing Much like seller financing, third-party financing does not come with as many stringent rules as bank loans. Although we do not all have a relative or close friend with a million dollars they would like to loan to our business, these loans can be made quickly without the same environmental or appraisal requirements other lenders would have. There are drawbacks, of course, as no one wants to drain their grandmother’s nest egg or have to endure a foreclosure experience with someone you know or love.
Purchasing the Building for Cash Probably the most elusive way to buy today, paying for a property in cash is also the most simple. You could buy the property as a sole proprietor or LLC, the lease it to your company. If you can truly afford to do this, be sure you are not sinking 100% of your available cash into the real estate. One of the biggest benefits of this method is that you can charge your business rent, which puts cash back into your pocket.
When it is time to establish or expand your business by moving to a commercial space, your small business attorney will ensure you are prepared for the process in order to ease the transition and maximize the benefits.
If you need help with commercial real estate law, contact me, Elizabeth Lewis, at the Law Office of E.C. Lewis, P.C., home of your Denver Small Business Lawyer. Phone: 720-258-6647. Email: email@example.com
Contact Us Today
Law Office of E.C. Lewis, P.C. Your Denver Business Attorney
501 S. Cherry Street, Suite 1100 Denver, CO 80246 720-258-6647 Elizabeth.Lewis@eclewis.com