Legal Issues to Consider When Starting a Business – Beyond Legalzoom

by David J. Schwab and Sharanya Gururajan

The beginning of a dream…

Starting your own business can be a very exciting and nerve wracking process.  It is important for business owners, especially first time business owners, to be well educated on the do’s and don’ts of business ownership.

The Internet is full of resources:

  • A word of caution: – Use reputable sites and be aware of any state specific laws that may affect your business;
  • We recommend starting with the U.S. Small Business Administration website: https://www.sba.gov/starting-business

Some Factors That Fuel the Creation of New Businesses:

  • Poor economy that has shrunk employment opportunities
  • Desire to be your own boss, driven by independence
  • Desire to continue in a family business/trade

Things to consider when starting a business:

  • Come up with business idea
  • Decide who will be owners/operators – by yourself or with others (minority/women owned)
  • Come up with a business plan
  • Be aware of all of your expenses
  • Surround yourself with competent professionals:
    • Accountant
    • Attorney
    • Banker
    • Insurance Agent
    • Commercial Broker/Architect/Contractor, if a build out is involved

What kind of Corporate Entity is right for you?

  • Sole proprietorship/general partnership
  • Limited liability company
  •  Corporation;
  • Limited Partnership;

Discuss with management professionals, considerations include:

  • Liability
  • Taxes
  • Costs

Most entities file with the Illinois Secretary of State – same agency which issues drivers’ licenses.

Filings with the Illinois Secretary of State, if necessary – Articles of Incorporation – Articles of Organization.

  • Complete balance of organizational document and records
  • Obtain FEIN from IRS – like social security number
  • In Illinois, register if sales or other taxes necessary, need to file paperwork to register with Illinois Department of Revenue
  • If the entity has employees, register with Illinois Department of Employment Security

Maintain Your Company

  • On an annual basis need file annual reports for corporations and limited liability companies.
  • Maintain business formalities, maintain business records, file tax and related returns.
  • Separate personal from business
  • If do not take action to maintain, you may lose the personal liability protection and may assume the liability personally.

 

Certain situations may result in court finding officers and directors personally liable for corporate obligations through remedy commonly known as piercing corporate veil.

Primary purposes of doing business as corporation is to insulate shareholders from unlimited liability for corporate activity.

After you come up with the next big business idea, contact the law firm of Ralph, Schwab, Gartner and Schiever, Chartered.  We have the expertise to help you build your empire.

Leave a reply