Many questions, including business formation, face the fledging entrepreneur beginning a new business. An experienced business lawyer can provide critical guidance when one decides to act on the dream of starting a business. With ninety percent of all start-up companies failing in five years, it is important that a potential start-up have a well-thought out plan.
According to statistics, small businesses with the highest failure rates include those in the fields of information technology, communications, transportation, utilities and retail. Those with the highest success rates are in finance, insurance, real estate, services, education, health, agriculture and wholesale. This does not mean that anyone with a solid start-up plan cannot succeed.
Some guiding principles for a successful start-up include starting the business with a product or service one believes in passionately; having a handle on personal finances before launching the new business; avoiding loans and instead using sweat equity as the best form of starting capital; and understanding one’s own areas of weakness and hiring or contracting out to others to handle those areas.
A business attorney can help with many of the questions related to business start-up, including questions concerning entity formation. There are several forms of entity available, including the sole proprietorship, the traditional corporation, the limited liability company, and the different forms of partnerships. Each has its own benefits and drawbacks. An attorney can help choose the best form of entity based on the nature of the business, the structure of its ownership and its capitalization, and the most advantageous tax treatment. A business formation attorney can draft the necessary formation documents, file them with the appropriate government agencies, and prepare the necessary agreements among partners or shareholders. An experienced business attorney is an indispensable ally who can guide the entrepreneur through the many challenges that are likely to follow as the business grows.
Source: Digital Journal, “Op-Ed: Four rules for starting a small business,” Dusty Wright, Oct. 7, 2013