Here’s a list of matters entrepreneurs should consider in forming a business, courtesy of Kevin Freeman, a Chicago-based corporate attorney with Drinker, Biddle & Reath L.L.P.:
- Business’ name and Website: Check with your local secretary of state to make sure that the name you want is available. If you do not intend to form an entity immediately, check to see whether you can reserve the name and for how long. Also, research whether or not the name is available as a Website too and reserve as many variations of the name as possible including all domain permutations (i.e. “.net” and “.us”)
- Trade names/trademarks: Consider whether your business or product name (or a mark) should be protected; file appropriate paperwork with the United States Patent & Trademark Office.
- Business plan/budget: Create a business plan and a budget, even if you do not intend to solicit investments from others. This will help you stay focused, work through problematic issues associated with your business, and help you set goals. Periodically compare your company’s current state of affairs to the business plan and budget; make adjustments as needed.
- Seek professional help: Although there is a general temptation to save money by doing it yourself, it can cost more in the long run if you have to pay someone to help remedy a situation that could have been prevented by consulting an expert. Attorneys and accountants are sometimes willing to give general guidance (either for free or at a reduced fee) to budding entrepreneurs with the hope that they will be retained in the future when the business reaches a point where it makes financial sense.
- Insurance: Consult with an insurance agent to determine the appropriate insurance policy for your business including D&O coverage, a policy covering directors and officers.
- Licenses: Check with your local city/town to insure that you have obtained the requisite business license for your business and confirm that you have obtained the necessary regulatory permits or approvals.
- Observe corporate formalities: To maximize liability protection and properly capitalize your company, hold shareholder and board meetings at least annually. Never commingle business accounts with personal money, and consider adding an independent director to your board of directors.
- MBE/WBE status:Investigate whether there are commercial advantages to registering as a minority-owned business enterprise or as a women-owned business enterprise.
- Know your industry: Get your hands on as much information as possible about your industry. Your goal should be to become an authority on your type of business.
A Sound Setup
Choosing an ownership structure can be tricky, but knowing your options can help you determine the right fit
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Check out these resources for additional information on company structures.
Books
- Form Your Own Limited Liability Company, 4th Edition (NOLO; $44.99) by Anthony Mancuso
- LLC or Corporation? How to Choose the Right Form for Your Business, 2nd Edition (NOLO; $24.99) by Anthony Mancuso
- Corporations, Step-by-Step (Barron’s Educational Series; $18.95) by David Minars
Organizations
- The Small Business Administration (www.sba.gov)
- The National Business Development