Business Formation Attorney in Overland Park, Kansas
Entrepreneurship seems to burn in the hearts of most Americans. The dream of being your own boss looms large in the United States. You may want to escape the 9-to-5, but it’s not something to be done quickly. There are many considerations, financial, legal and others to be weighed before taking the dive into your own business – or with others.
The first and often most important step, certainly in terms of protecting your personal assets, is to choose the right structure for your new venture. You can create a sole proprietorship, meaning you are the business for all practical purposes, but this leaves you also personally liable for any debts or legal obligations for your new business.
Even in a partnership, liability is shared, and all partners’ assets may be exposed to liability. A limited partnership protects somewhat by making the general partner mostly responsible and liable, but there is still some exposure for the limited partners.
A limited liability company (LLC) combines the aspects of a partnership with the liability protections of a corporation. Of course, a corporation generally shields all owners, or shareholders, from personal liability, but it is also more complex and challenging to run to meet all IRS and other legal requirements.
If you’re looking to form a business in or around Overland Park, Kansas, contact the Coppaken Law Firm immediately to discuss your options and the best route to take. We have experience with every size of business from sole proprietorships to Fortune 500 companies. We also proudly serve clients in Kansas City, Missouri, and throughout the counties of Jackson and Johnson.
Choosing a Business Structure
The above brief introduction affords a snapshot of liability issues regarding the formation of a new business. In a sole proprietorship, you, as the business owner, expose all your assets to satisfy any debts or other obligations accrued by your business. This means that your home, your car, your art collection --- whatever you have – can be seized to satisfy outstanding obligations. You may be able to use bankruptcy to shelter some assets, but it’s still a risky situation to find yourself in.
A general partnership exposes all the partners’ personal assets to satisfy business debt, lawsuits, and other legal actions. The partners’ exposure to liability can be protected somewhat in a limited partnership, which names a general partner to manage operations and assume most liability. The limited partners generally have little or no say in operations while enjoying some protection from personal liability.
A limited liability company, or LLC, does protect its partners – who are called “members” in an LLC – while making the LLC itself responsible for debts and other obligations. A corporation, whether traditional or Subchapter S, generally shields shareholders (owners) from liability unless someone can “pierce the corporate veil,” which means to prove that it is only a “shell” corporation designed to shield assets.
Of course, a sole proprietorship is the easiest to create. A partnership must file papers and create a partnership agreement. Likewise, an LLC must register and file articles of organization. A corporation is even more complex. Not only do you need articles of incorporation, but also bylaws to govern how the entity will be managed by a board of directors and corporate officers.
It is vital to get in touch with an experienced attorney to avoid any challenges or mishaps.
Getting Started: Establishing Contracts
Once you go into business, you’re no doubt going to need the help of others, whether suppliers, accountants, clean-up or delivery crews, and who knows what else? It really depends on the nature of your business. In short, you will need to enter into contracts with others to run your business.
While you may feel that a handshake agreement is good enough, you should realize that these handshakes can be considered binding contracts. Rather than leave anything to chance, you need to make sure all your agreements are in writing.
If you rely on a steady shipment of products to sell, for instance, but the supplier suddenly stops providing those goods, you may find yourself in a breach of contract. Your business could spin to a stop if you don’t act quickly. A written contract is much more enforceable than a handshake agreement.
Other Important Steps
Another essential element is obtaining an Employer Identification Number (EIN) to pay your taxes. You may also need to contract with an accountant or accounting firm to make sure your taxes, payroll or otherwise, are honored on time and in full.
Depending on where you’re located and what your business focuses on, you may also need to obtain permits and licenses. There may be zoning issues for which you need a variance or permit, and your particular type of venture may require a business license. You need to ensure all these requirements are met.
There’s also the need for liability insurance. If you run a business that’s open to the public, there’s always the possibility that a customer or client may get injured accidentally on your premises. In that case, you’re going to want to have commercial liability insurance to deal with the injured party’s claim. If you have employees, then you’re going to need to purchase workers’ compensation insurance in case they get injured at work or fall ill to workplace conditions.
Business Formation Attorney Serving Overland Park, Kansas
Forming a business can be both exciting and challenging, but if you’re not careful, matters can turn south if you don’t take into consideration every possible twist and turn your entity may face. Bring your idea for a new business to us at the Coppaken Law Firm. We’ll evaluate everything and advise you of the best options you have. We will then help you form and create your new business entity in Kansas City, Kansas, or Kansas City, Missouri.