No successful entrepreneur goes into a startup business without a vision. Whether it’s a five year plan or a lifelong dedication, every great small biz is built around a goal — and a commitment to fulfilling it. Unfortunately, a lot of businesses get it wrong from day one.

The incorporation process is a business owner’s first opportunity to start forging a long term legal partnership — but all too often, entrepreneurs end up with nothing more than a frugal fling. The following are a few questions that should help you find that special someone to meet your legal needs.

Are they a good listener?
Is your legal partner available for private counsel? From the time you incorporate, an attentive legal partner can make a big difference. By analyzing your overall business structure from the start, they can identify potential liabilities that could be remedied before they ever become problems. Ideally, you’ll want to have the freedom to inquire with your attorney about the legal consequences of your business decisions.

Do they have a dynamic personality?
Does your lawyer have a wide variety of legal experience? If you’re looking for a long-time match, you’ll want a legal partner who’s prepared to tackle the different areas of law that affect a business, including labor/employment, contract law, taxes, insurance and intellectual property to name a few. Many factors will come into play once you’re incorporated.

Are they good with money?
Does your law firm inform you regarding the financial impact of your legal decisions? Attorneys who are accustomed to working with larger corporations may be less sensitive to your budget constraints as an entrepreneur. Be sure to monitor their billings closely.

Have they been around the block?
Has your legal partner worked with clients from a variety of different backgrounds? A broader perspective of this sort can be helpful, as it allows your attorney to apply the lessons learned in other industries to the ones you may face in your future.

Do you get along with their friends?
Can your attorney connect you with the rest of the professional experts you’ll need to round out your business team? A lawyer that has strong relationships with accountants, bankers, financial planners, insurance agents, business consultants, government contacts and other professionals can be a big help in constructing your small biz “entourage.”

And lastly… do they open doors for you?
Can your legal partner connect you with the rest of their clients for business networking?Referral business of this sort can be a great way to build your client base in the early stages of your new venture.

The ideal law firm can do much more than file your incorporation with the state. They can support you. They can connect you. They can assist you in practically every aspect of your business. So choose wisely — incorporating your business is just the first of many big dates.

If you’ve made the decision to incorporate your business, you’re off to a great start (More on that in our last blog). But before you can even move forward with THAT, you’ve got another big decision to make — whether to incorporate as an LLC or INC. This “starting a business” thing isn’t going to be easy, is it?

We’ll do what we can to help. Let’s talk about how to choose one of these three-letter designations, and how that decision will impact your business in the long run.

First, the basics. INC is just what it sounds like — an abbreviation for Incorporation. So what does LLC stand for? That’s a “Limited Liability Corporation.” If you’re familiar with the advantages of “incorporating” (a general term that covers both the LLC and the INC), that may sound redundant, as the primary purpose of any incorporation process is to reduce the liability on the shoulders of the business owners. It’s true — in fact, the INC was once the only viable option provided by the State for designating a separate legal entity from the individual people running the business. But the LLC goes a step further — it’s set up to make things simpler, particularly for small businesses.

Here’s a few of the ways your decision between an INC and an LLC will impact your business:

Who calls the shots?
An LLC has Members and Managers. An INC has Shareholders, a Board of Directors and Officers. The greater hierarchy in the INC means more paperwork, but more possibility for varying levels of company ownership.

What do the rules look like?
An LLC is controlled by an Operating Agreement. An INC runs according to Bylaws + Minutes. An “operating agreement” is a simple series of declarations that clarify certain possibilities that may arise as the company grows and changes. Bylaws and minutes go to extra lengths to ensure a series of checks and balances can be carried out by all levels of ownership.

How do you file your taxes?
An INC can be filed as an S-Election or a C-Election. An LLC can be filed as either of these, but also adds the options for filing as a Sole Proprietorship (for one owner) or a Partnership (for more than one owner).

Who’s got skin in the game?
With an LLC, the employees are just that — they don’t have a stake in the company unless they are or become “Partner”. In an INC, on the other hand, there’s room for any number of Passive Investors to join your ranks, as well as numerous Partners at varying levels of control and ownership.

These are just a few of the many differences between an LLC and an INC. As you can see, this is a decision that will have a lasting impact on the way the government looks at your company and the way you do business. So take your time. Talk to your business partners. Get an outside perspective.

And finally — as always — don’t hesitate to consult a legal professional for expert advice.

When it comes to starting a business, your first question is probably “Why do I need to incorporate?” You might be surprised to find out it goes well beyond registering a name or putting your corporate flag in the ground. At its heart, incorporating a business is all about securing you and your loved ones. It’s kind of like creating an alter-ego in the name of your business — by day you’re a mild-mannered individual, but when you incorporate? Cue the fanfare!

When you file for Incorporation, you’re asking the State to recognize your new business as a new and separate legal entity from you and any other owners. It’s a legal process that encourages entrepreneurship by giving you a “shield” to protect your personal assets as you begin a new venture. So while you’re off taking the necessary risks of an entrepreneur — developing operations, making investments, signing with partners, and other heroic acts — your personal assets are safe at home.

Every start-up should incorporate, whether it be as an LLC or a Corporation. By doing so, the owners of the business will have their personal assets protected by a shield known as “limited liability”. Within the LLC or Corporation, owners can sign contracts, assume debts, buy real & personal property and open bank accounts. In time, the LLC or Corporation can even develop its own credit rating, ultimately freeing the owners from having to make personal guarantees for the business. The shield protects against corporate creditors as long as the business owners don’t personally guarantee a debt, loan etc. on behalf of the LLC or Corporation. But beware; the shield is not absolute.

In certain instances, the shield can be “pierced.” It’s known as “piercing the corporate veil,” and it’s the kryptonite to your superpower. If you commit fraud while acting on behalf of the business, commingle funds between you and your “alter-ego,” or fail to keep up with your corporate formalities — even seemingly banal tasks like taking the annual minutes for Shareholder and Board of Director meetings — you may open yourself up to being sued personally.

It takes long-term vision to hang on for the long haul. But before you set your eyes on “leaping tall buildings in a single bound”, make sure you don your cape and shield — protect yourself professionally and personally with a legal, State-filed incorporation.

Looking for a legal super-hero? Call Gil today to see what SmallBizLaw can do for you!