By James T. Stimler, Esq.
1. Words have consequences: Do not call your business a “partnership” or a “co-op” or anything else without understanding the legal meaning of the term used to describe your business. Your personal exposure to liabilities, your tax exposure, and the business structure required to lawfully create your business, among other consequences, flow directly from the terms you use to describe your business. In other words, your choice of business entity, the words you use to describe your business (e.g. limited liability company (LLC), corporation, Sub S corporation, limited partnership), must be the legally correct choice and legally structured to achieve your business goals.
2. Find a good lawyer: This can be daunting or scary, but it doesn’t have to be. Here are tips to get you started:
3. Only use generic/or internet legal forms after getting specific legal advice from a qualified lawyer to be sure that each form you think is right for your business really meets your specific business needs. If you want to contain costs and use a generic legal form you found on the web [or obtained from a similar business] to get started, rather than start with customized documents made for your business, such as a purchase order, non-compete agreement, LLC formation documents, etc., do not use the generic document/form you found without first reviewing the document with an experienced lawyer to get his/her advice and confirmation that such legal document really meets your specific business needs. Remember this: an “off the rack” suit is not cheaper than a “tailored-made suit” if the required “alterations” are extensive. So, don’t step over a dollar to pick up a dime. It is important to keep in mind that a court will often hold a business person to the terms of a legal form that a business person used, even if it causes a bad result for them.
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This blog article is for general educational purposes only and may not be relied upon as legal advice from the author to the reader.
© 2018 James T. Stimler, Esq.