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Here
are some common legal questions and answers that individuals encounter when
starting their own business. For more in-depth questions and answers,
please consult a professional accountant or attorney. If you're going
to go to all the time, trouble and expense of starting a business, you need
to make sure your company is structured so that it protects your interests
and fits your goals. In addition, if you ever have a legal problem, you'll
need someone knowledgeable to advise you. The costs are not as expensive as
you might think, and the value you'll get is significant.
Now,
let's take a brief look at some common legal startup questions:
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What's
a DBA? "DBA"
stands for "doing business as," and it's is just another name
for your business. Sometimes people want to use different corporate and
business names. For example, "Jones Inc." could be the
corporate name, with "Bob Jones Landscaping" as the business
name. In this case, you would see it described in a legal context as
"Jones Inc. doing business as Bob Jones Landscaping."
-
Should
I incorporate in Delaware?
There used to be some tax and legal advantages to doing this,
particularly if you were a very large corporation with many
shareholders. But based on everything researched, incorporating in
Delaware isn't important for a small startup.
-
Will
a corporation protect me from liability?
It can, if you handle it right. You may have heard about the corporate
veil, which means that you can't be sued personally for anything that
happens in the corporation and your personal assets can't be attacked by
creditors or a lawsuit on the corporation. But in order to have this
protection, you must act like a corporation. This means having board
meetings, taking notes and publishing minutes in your corporate book. In
addition, be sure to have a separate corporate checking account and, if
you need them, corporate credit cards. Don't use corporate money for
personal things, and vice versa (unless you file an expense report).
Many people think they don't need to go to all this trouble if there's
just one or two people in their company, but in order to be treated like
a corporation, you must act like one.
-
How
do I register my company name?
Contact the office of the secretary of state for your state. I haven't
been able to find a good, noncommercial listing of each secretary of
state's contact information, but you can find the one in your state by
going to Google and
searching under "secretary of state." To find the one for
California, for instance, do a search for "secretary of state
California." Most will have an overview page (often named something
like "Name Registration FAQ"), which will tell you all you
need to know about how the process works.
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Do
I need a business license?
This is a pretty complicated question. However, here are two good
articles that will tell you what you need to know: "Licensed
to Run" and "License
and Registration, Please."
Remember,
tax and corporate laws change all the time and can vary significantly from
state to state. If you're going to be successful in your business, you'll
need professionals on your team who can keep up with changes in the laws and
tax codes and advise you as you move ahead in your business. This will
reduce the chances of some unknown issue blindsiding you, and will also save
you money as you use those laws and codes to your best advantage.
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