Why Your Company Needs Legal Advice

Posted by Alec Hess

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If you’re starting a new business or have been operating your business as a sole proprietor, you may want to consider incorporating, as well as other legal issues that affect tax responsibilities, inheritance, etc.

Letting legal issues go unexamined could be harmful to your company’s health and well-being and certainly will dampen any efforts to raise funds through investments or borrowing. Incorporating can actually give you a lot of benefits, especially if you are part of a business that is thinking of growing larger in the future. One of the most important benefits is protecting you personally from debts and/or lawsuits incurred by your business.

A Few Benefits of Incorporating:

• Limited liability: What this means is that the owners of your corporation are separate entities from the corporation itself. So if your corporation defaults, you would not be held financially responsible. Compare this to a sole proprietorship, where the owner would be responsible for anything that happens.
• Raising capital: A corporation is allowed to sell portions of its ownership as stock. This is the only type of business entity that can do this. If you plan on selling stock, you would need to incorporate first.
• Stable future: As you would be a separate entity from the corporation, your company would be able to survive even after you’re gone. No matter what you personally decide to do, it can exist without needing to rely on you.
• Tax benefits: If you incorporate, you can deduct fringe benefits such as medical insurance and travel expenses, since the premiums that you or your employees pay are 100% deductible. Income tax may also be lower. Not only that, but you can deduct your losses from your income tax as well, which is especially helpful during the early life of a business.

Legal Issues to Look Into:

There are many other legal issues you should investigate so your company rides high and clear from any complications in the future.

• Business Name: Are you sure you can use the name you selected in your state?
• Patents: Should you apply? Are you violating someone else’s?
• Trademarks: Make sure you search and clear any competing trademarks.
• Copyrights: Understand what you can and can’t copyright and the process.
• Intellectual Property Rights: What are they and how should you protect yours?
• Leases: Don’t get caught in an unfavorable contract that could hurt your business.
• Contracts: Hiring, purchasing, supplying, and many more issues will need contracts. Don’t sign anything if you’re not sure.

Alec Hess is a marketer and small business expert as well as Principal of Full Voice Media and Vanguard Healthcare Products; and co-founder of BizSaves. His focus is on small business success and he has consulted, guided and advised many firms.
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Articles on Incorporating:

Inc.com: Now May Be the Best Time to Incorporate Entrepreneur: Incorporating Your Business Forbes: Tips for Newly Incorporated Business Owners