Starting or buying a business can be both exciting and frightening. You become on your own boss and get to watch your dream come true. But what about all the legal issues that arise when you are running a business?
Some of the first things that you should consider if you are starting or buying a business are:
- Creating a written partnership agreement if you have partners in your business. The partnership agreement should be an Operating Agreement if your business will operate as a limited liability company or a Shareholders Agreement if your business will operate as a corporation. This written partnership agreement should address items such as what happens if one partner decides to spend more time mountain biking than running the business and what happens if one partner can’t work for 2 months due to a skiing accident.
- Consulting with your tax advisor and an attorney as to whether your business should operate as a corporation, limited liability company or some other form.
- Meeting with state and county officials to determine which permits or licenses you will need, if any.
- Consulting with your insurance broker regarding the types of insurance that you will need.
This list is not comprehensive. It is designed to getting you thinking about the tax, insurance, legal and other advisors that you need on your team to help set your company on a firm foundation.
However, one of the most critical first steps for you to take when starting or buying a business is sitting down with your partners and developing a written agreement regarding the expectations of each partner so that there are no misunderstandings in the future. Once you have written down these expectations, consult with a lawyer to discuss frequent problems that arise when there are two or more business owners. Remember, your relationship with your business partners is just like all the other relationships in your life. The relationship involves another human with unique feelings and needs. You need to communicate clearly your expectations except in the case of a business those expectations should be in writing.