Thinking of going into business? There are, of course, many questions to be answered before you launch your business. First, you must decide whether you have the experience, skill, business know-how and sheer stamina it may take to be successful. You must decide what that business will be, where it will be located, whether you will start from scratch or buy a going business, how much capital you will need, and so on. Preparation of a thorough business plan is very important in becoming successful. And, finally, there are many legal questions to be answered, some of which are covered in here. For full information on how local, state and federal laws would affect your business, you should consult your attorney at an early stage.
Before choosing the type of organization, you will be wise to contact your attorney and/or accountant. The importance of professional assistance will become readily apparent because the type of organization you choose for your business involves a great many considerations which can be brought to your attention by your professional counselor. Some of the questions that you will want to consider concern tax advantages, organizational expenses, control of the business, expansion of the business, perpetuation of the business and personal liability resulting from the business. This is not a complete list, but should assist you in your choice of business organization type and in obtaining professional assistance before starting your business.
You may conduct your business under your own name, the names of your partners or business associates, or under an assumed name. When consulting your attorney, inquire as to whether or not the name you choose must be registered with an official with the city, county, or state government. You should remember not to choose a name that is the same name or deceptively similar to the name of another business or you may face legal action. You may be able to obtain protection for the exclusive use of your business name.
A license must be obtained from the state for certain businesses, such as retail and service establishments, beauty shops, private employment agencies, and small loan companies, to name only a few. It may be necessary to obtain a state or local license for your business and again you should consult with your attorney to determine whether or not a license is necessary. If your business is home-based, certain restrictions may apply.
As you well know, tax consequences will result from your operation of business. State, local and possibly federal taxes will be imposed upon your business and to determine which of the above taxes will apply to you, how much you will have to pay, and the most advantageous type of business from a tax standpoint, it will again be necessary for you to seek professional counsel and advice from your attorney and/or accountant. You may be further required to obtain state and federal account numbers and authority for collection, reporting and payment of sales and employee taxes.
Anyone hiring employees may not discriminate against any applicant because of race, color, disability, religion, or national origin, and, with certain exceptions, may not refuse to hire a person solely because of that person’s age or sex. Also, the law regulates the employment and working conditions and hours of minors especially, and of all employees generally.
You may be required to pay minimum wages and overtime as established by law.
As an employer you will find it advantageous to cover any liability toward your employees with insurance. The type, amount, and extent of coverage necessary for your business to protect you, your employees, your business property, and other liability situations should be discussed fully with your qualified insurance broker.
Any time you sell stock, most types of notes or other interests in your business to family, friends or other investors, federal and state securities laws apply. Such sales must be registered under those laws unless an exemption is available. To qualify for some exemptions, you may need to file documents with governmental agencies either before or after a sale is completed. Failure to comply with federal and state securities laws can result in personal liability. The effect of securities laws should be discussed with your lawyer.
If your new business will enter into a franchise agreement, it is important that you have your lawyer review the franchise agreement and the franchise disclosure documents before you sign the agreement. Franchise agreements typically impose very significant financial and legal obligations upon the franchisee. Your lawyer may be able to help you modify the franchise agreement to make it more favorable to you.
Obtain Professional Counsel
Do not hesitate to obtain professional counsel. Good advice can make the difference between success and failure. Here are some of the ways in which professional advisers can be of assistance to you:
LAWYER: Joseph A. La Zara and Associates attorneys can help you choose the type of business organization that best suits your needs and objectives; advise you as to local, state and federal regulations which may affect your business; prepare or review contracts; and give practical advice on many business problems. As your attorneys, we can also revise your will and/ or other estate planning documents to include your new business interests.
BANKER: He or she can point out possible sources of capital including a mortgage on your home or other property, commercial bank loans, credit from suppliers of equipment and merchandise, financing of receivables by a factoring company, a Small Business Administration loan and other sources.
ACCOUNTANT: He or she can help set up and supervise procedures for keeping payroll, tax and other business records.
INSURANCE BROKER: He or she can advise you as to the types and amounts of insurance you should carry to protect yourself and your business against loss.
The local Chamber of Commerce, or, in Chicago, the Chicago Association of Commerce and Industry, and the Small Business Administration, a federal agency, can also assist you in the formative stages of your business and thereafter. State and local business incentive programs may be available to you; that availability and qualification requirements for assistance should be thoroughly examined at the outset of any new or expanding business endeavor. You should determine whether your business qualified for minority-owned or female-owned business certification.
The odds are against the eventual success of any new business. The majority of new businesses fail for a variety of reasons. Those reasons range from lack of market to inadequate organization. The cost of failure is always high, if not in dollars, then in disappointment and personal disillusionment, not to mention long hours and hard work. Your attorney and other professional advisers cannot guarantee your success; but they can help improve your odds.