Hey everyone, thanks for joining me for another Finance Talk with Josh. We usually talk about general ideas that will help you save money. However, today, we’ll be talking about a completely new subject. The truth is, as a Penny Pinchin’ Mom, or Dad, chances are, at some point you’re going to want to start your own business. It’s something most people with frugal mindsets do. I’ve been part of a few businesses to this point, and the biggest piece of financial advice I can give you when starting yours is to get in contact with a lawyer.
Starting a business is a huge step for any American, and there’s a lot of risk that comes along with that step. When you start your business, you could be setting yourself up to live the American dream, or to find yourself filing bankruptcy in a couple of years. To avoid the later, it’s important that you dot your legal I’s and cross your legal T’s.
Your Business Is Unique, Which Really Limits What I Can Tell You
The reality is that when you open a business, you’ve got unique goals, amounts of funding available, tax preferences, and more. That being said, there is no possible way that a simple online article can tell you exactly what to do. Research is great, and you should be researching before you decide to make the big move. However, when that time comes, make sure you have a lawyer on your side to explain how things will work for your unique business.
3 Things Your Lawyer Is Going To Help With
#1: Decide The Type Of Entity Is Best For Your Business – There are tons of different business entity types out there including, but not limited to LLC(Limited Liability Company), CO(Corporation), Sole Proprietorship, Limited Liability Partnership, General Partnership, and Limited Partnership. Each of these comes with different legal implications that could help to make or break your business. To do more research on the different types of business entities there are to choose from, click here.
Step #2: Determine How You’d Like To Be Taxed – Depending on the way you decide to be taxed, you’ll be filling out different forms each year. For instance, if you decide to be taxed as a Sole Proprietorship, you’ll be filling out the Schedule C which is an income or loss form for the business. Single Member LLC’s are taxed as a Sole Proprietorship unless you elect to be taxed as a Corporation. And that’s just the tip of the iceberg. Key terms like S-Corp and C-Corp could change the amount of money you’ll end up paying in taxes each year. To learn more about how businesses are taxed in the United States, click here.
Step #3: Adopt The Bylaws Of The Business – Every business needs to adopt their bylaws before operating. This means signing agreements between the members of the business, filing articles of incorporation. You may need to adopt articles of organization, create an operating agreement, and even a member control agreement (Also known as “buy sell” or “first option to buy”). These bylaws will control how the company is run in terms of voting, profit sharing, provisions about where meetings will be held, how special meetings will be conducted, stop the sale of your business to other parties, and more. To learn more about bylaws, click here.
These are the first 3 things you should do to start your business, well aside from researching them. However, don’t go at it alone. That would be like stepping in the ring against Mike Tyson with no one in your corner. Always speak with a lawyer before starting your business.
I’ve started my own businesses in the past. However, working with my business, I just don’t have the time capacity to really sit down and learn every little nuance about it. That being said, for this article, I did quite a bit of research. That research was nothing compared to the help that Mr. Jack Dwyer of Dwyer Law Office provided. For more information about him and his firm, click here.
Have you ever started a business? Did you have a lawyer help you?