It’s thrilling to start a new business! But, getting a new business up and running requires time, dedication and resources. Here are some important issues you need to consider:
Choice of Entity. Figure out the structure you need to put in place in order to operate your business. Most business owners set up limited liability companies or corporations in order to protect their personal assets. In the event the business is sued, a successful plaintiff will only be able to reach the company’s assets, not the business owner’s assets. Setting up a separate entity enhances the value of the business with lenders, investors, potential business partners and potential buyers when you sell your business. Other common business structures are sole proprietorships and partnerships. You will need to file the appropriate paperwork with the Secretary of State’s Office and/or the County Clerk’s Office documenting the formation of the business.
Ownership and Management. Decide who owns the business and how it will be managed. Document their responsibilities and obligations. Consider how you will identify and develop business relationships with customers, suppliers and service providers.
Financing. Plan how you will finance the acquisition and operation of your business. If you do not have the necessary funds to invest in your business will you be able get adequate financing through loans or a line of credit?
Name. Choose a name that is associated with the goods or services you are providing and is easy to understand. Check to be sure another company has not already trademarked the name. You may also need to set up an assumed name, or d/b/a (“doing business as”). You are required to file an assumed business name (d/b/a) if you operate your business under a name which differs from the business name filed with the Secretary of State’s Office. Sole proprietorships or partnerships must file assumed name certificates when the business name does not incorporate the owners’ surnames.
Location. If you are leasing space, be sure to review the lease provisions concerning assignment and subletting so you have options if your business grows or contracts or you decide to sell your business. If you are transacting business in another state, find out whether you are required to register your business in that state.
Taxes. Identify your tax responsibilities, including federal income tax, employment taxes, Texas franchise tax, sales taxes and local business taxes. Consider whether you need to work with a CPA to help you with these matters.
Licenses and Permits. Obtain any obtain any licenses, permits, certifications, registrations and/or authorizations the business needs to operate.
Employer Requirements. Determine the federal and state employer requirements concerning labor, safety, access and new hire reporting. The Texas Workforce Commission is an excellent resource for these matters.
Workers. Correctly characterize your new hires as either employees or independent contractors. If the IRS determines that an employee has been incorrectly characterized as an independent contractor, the business will be required to pay back wages, overtime, FICA, unemployment contributions, worker compensation, medical insurance, vacation pay, and other amounts that should have been withheld on the employee’s behalf.
Insurance. Decide on the types of insurance does your business needs. These may include general liability insurance, product liability insurance, professional liability insurance, commercial property insurance, vehicle insurance, workers compensation insurance, unemployment insurance and disability insurance.
Written Agreements. Once you are ready to conduct business, be sure to put all agreements in writing so there is no room for misunderstandings. Verbal agreements are extremely difficult to enforce and can be very costly to your business. Document clarifications, changes, extensions to delivery deadlines or new instructions. Require written confirmation accepting the modifications from the other party.
Starting a business can be challenging. Business owners should consult with their legal and tax advisers. For more information, please contact Kathy Tremmel at Tremmel Law, PLLC at (512) 539-0317 or email@example.com.