Q&A: Attorney Brent Greers on Legal Rules Every New Business Needs to Understand
What steps can someone take to determine what kind of entity they need to be?
Your primary questions to ask yourself should be about taxes and liability. So, depending on your answers to those two questions will determine what the most appropriate entity for you is. For most people, an LLC will be appropriate.
What do people need to know about being an LLC?
One of the biggest misconceptions is that it provides full coverage law liability, cart blanche, and that is not the case. The term-limited liability is very much that-limited. You still need the right permits, follow zoning regulations, as well as have insurance to protect yourself from any potential liabilities.
What are some common mistakes you see people make when starting out?
The number one mistake is not having a proper system in place to account for everything. It is a whole lot easier to build a system from the ground up than to go back after a year with a box of receipts. As you build and make money, your system will grow with you. All of those behind-the-scenes things–the paperwork, processes and systems — are really important to start from the ground up.
What other legal documents do business owners need to protect themselves?
Mainly internal documentation. If you have partners, figure out who is responsible for what, how assets are split. Beyond that, it depends on what your business is. You have to determine if you are offering guarantees or warranties. Anything with employees needs to be in writing in some sort of fashion. For service businesses, if you are writing your own contracts, make sure that they are reviewed by an attorney and be cognizant that if there is any ambiguity down the road that it will be construed against you.
What advice do you have for people who are starting out and might be overwhelmed with getting this stuff in order?
Look a year down the road at where you want to be, and work backward. Go back from where you want to be and take it step-by-step to help yourself figure out how to get there. A lot of people are at the starting line and don’t know what direction to go on. Thinking of it backward helps.