Business Law Basics For Entrepreneurs or Weekend Hobbyists

By: Brandon M. Allen

Whether you are an entrepreneur looking to formalize a new business concept or a hobbyist who has found a niche market and wants to capitalize on the idea, the area of business law may be of some interest to you. Determining whether you need a sole proprietorship, LLC, corporation, or other form of business entity can be confusing. Partnerships may be presumed based on the way that a business is operated, making it important to formalize your intent from the time that your business begins operations. We will outline a couple of business formation models and services that we offer below:

Limited Liability Company Formation

A limited liability company (LLC) is a relative new concept in the history of business formation. LLC’s may consist of multiple members or could also be established by a single member. The benefit of an LLC, when managed properly, offers protections to its members should the business run into issues resulting in financial or other liability. With the assistance of a knowledgable accountant, an LLC can be managed and ran successfully as a business that remains separate from its members. It is important to note that assets of the LLC should be used only by the LLC. Similarly, assets belonging to members personally are typically not to be used by the LLC. The business is its own entity and it is important that all aspects of its operation are handled in that manner.

Contract Review

Businesses need contracts, and those contracts can often be complex and vital to the success of the relationship being formed by their acceptance. All parties to a contract should have their best interest in mind when entering into a contractual relationship. As a result of this, contracts are often negotiated and modified many times before they are executed and become binding. We recommend that our clients have contracts reviewed by legal counsel prior to entering into legally binding agreement. In fact, many contracts are transparent and include clauses indicating that all parties have been given adequate time to have their contract reviewed by counsel. Rushing into contract execution or being told by another party that it must be signed immediately should raise a cautionary flag, unless there is a legitimate reason for entering a contract under emergency or other circumstances. If you have prepared a contract for your business or have been asked to sign a contract that has been prepared by another party, the attorneys at McDonald, Levy & Taylor, PLLC would be happy to assist in a review of the document to ensure that your best interest is represented throughout the transaction.

Non-profits

Non-profit entities must be formally established similar to businesses that operate to earn a profit. These business entities take many forms and are granted non-profit status because they serve to benefit the public in some fashion. Non-profit formation may require additional steps for approval, such as seeking 501(c)(3) status during the formation phase of the entity. There are also restrictions regarding how the business operates based on its tax-exempt status. It is important to seek a highly competent accountant for the on-going management of the entity after its formation. If you have an idea for a Non-Profit business and would like to seek assistance in its formation, the attorneys at McDonald, Levy & Taylor, PLLC would be happy to guide you through the intricacies of its formation.

Tags: Business Law