All business owners should take special care to ensure that their business and assets are protected and that the right foundation documents are done correctly. If you are looking to incorporate your existing business, or are starting a corporation, be sure to budget for professional assistance and avoid these potentially costly mistakes.
1. Not Setting Up Legal Shareholder Agreements
Entrepreneurs who are expanding a business are often focussed on growth and finding investors. While this is a good thing, the problem is that they sometimes forget to make sure they set up clear and legally binding shareholder agreements.
A stockholder agreement (or shareholder agreement) acts as a confirmation of what happens as your business grows and changes, and as stockholders change their priorities, withdraw, buy and sell. It will also be used to outline voting and transfer and registration issues.
2. Rushing to Incorporate
Business owners who are starting a corporation are often eager to move forward and grow the business, but we suggest you take time to understand your priorities with regards to the law, your various contracts and how you want your business to play out in the long term.
We recommend that you work at a slower pace since there is often a lot of ground to cover with respect to legal coverage and administrative paperwork.
Don’t be so eager to jump in with two feet if it means taking the risk of missing some important documents or registration papers.
Instead, hire a qualified legal representative to take you through every step carefully, to make sure that no stone is left unturned and that everything is done properly.
3. Making a Mistake On the Certificate of Incorporation (or Other Formal Documents)
One of the most important documents you need to get set up is the certificate of corporation. This is something that you are required to file with the state. It’s also important with regard to shareholder rights.
Your lawyer will be able to help you figure out applicable state laws and whether or not you need to create additional provisions in the certificate. Depending on the structure, industry, and nature of your company, this can end up being a complex document.
Read more about essential documents needed for starting a corporation.
4. Failing to Comply with Regulations
Business owners who want to expand and build their business into a corporation need to get a clear vision of what’s required with regards to local, federal and state-wide regulations.
For instance, if they are in resource extraction or waste disposal, you’ll need to ensure that environmental standards are met.
They will need to fill out certain forms in order to ensure that the state is aware of all of their dealings.
There’s a lot to account for so you need to make sure that it’s done right.
5. Failing to Report Certain Taxes
Corporate attorneys can help guide you towards the right entities with which to report your taxes.
Complex companies such as corporations in the State of Colorado, for instance, will likely need to register several items with the state. This depends on what kind of business you have. For instance, restaurants and food vendors need to obtain special licenses.
This is related to tax reporting and you don’t want to make a mistake with that.
Your licensing and reporting will also depend on the type of industry you are in starting a corporation.
Business law attorneys won’t do your taxes for you, but they will help you to understand what needs to be reported and filled out depending on the nature and type for your business.
Call a Qualified Small Business Lawyer Today
The only thing constant is change — and this is true for your business. Don’t let an unexpected event be the cause of an expensive lawsuit or worse, lead you to bankruptcy.
Having a trusted law professional by your side when you first set up your business can save some major time and even legal costs down the line.
If you are starting a corporation, you can rest assured that a great lawyer will help you to get everything in place at the outset. They can also act as a consultant on an ongoing basis to ensure that you are protected.
Don’t set yourself up to regret your business choices later and risk having your business fail. Instead, contact reliable legal help today!
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