Significant Loan

As a San Diego North County business attorney, I am frequently asked: “What does it take to start a business?” Generally, there are six steps to take into account when starting a business:

1. DECIDE ON A LOCATION FOR YOUR BUSINESS

When deciding on a location for your business, certain factors need to be taken into consideration such as liabilities, taxes, incorporation costs and fees; where you want to do business; foreign entity doing business; raising capital; and reporting requirements. The decision to incorporate the entity in another state should only be made after weighing the advantages against the disadvantages. These factors should be discussed with your business attorney before you decide on a location for your business.

2. DETERMINE THE APPROPRIATE BUSINESS STRUCTURE

There are several business structures that are used in setting up a business. Here are some of the most common entities used, their requirements and liability issues:

Sole Proprietorship is a business owned and operated by an individual. Sole proprietorships are the basic forms of business organizations, which require no formal type of government filings to form the business and are not required to follow any type of operating formalities. The benefit of a sole proprietorship is the taxability of business income and the deductibility of business losses on the business owner’s individual tax returns. The liability of a sole proprietorship is that the business owner is personally liable for all liabilities and obligations of the business, which liability extends, not only to liabilities in excess of the amounts invested in the business including any insurance coverage, but also to the business owner’s personal assets.

General Partnership is an association of two or more persons to carry on a business. A general partnership is another type of business entity which is easy to form but requires a written partnership agreement to govern the operations of the partnership and the relationship among the partners. Compliance requirements for a partnership are minimal and require that a Statement of Information be filed with the State of incorporation and the partnership maintains records to provide to the partners. The liability of a general partnership is that a partner’s liability not only extends to that partner’s percentage interest in the business but also to the partner’s personal assets as well.

Company and business law is a specialist subject so, when starting up a new venture, it’s a good idea to talk to the people with the experience. When we start a company to do business, the most common reason is to separate the enterprise risk from our own personal and family assets. This means it’s possible to limit the amount of money that a business owner can owe personally.

One of the most popular and successful types of enterprises is a limited liability company. This option has several advantages over a partnership or a company with sole trader status.

1. Forming a limited liability company means you can protect the name of your enterprise. When your establishments name has been registered, no one else can take that name. This is not the case with sole traders and partnerships, who do not have access to a register where they can protect their establishments name.

2. A limited liability company is a separate legal entity from any of its shareholders, which means that a shareholder can enter into a contract with the firm. Shareholders may be employed by the firm and may loan money to the enterprise in the same way as any other unrelated party can do. This also means that the shareholders’ liability for losses is normally limited to their share of the enterprise ownership.

3. With a limited liability establishment, it is much easier to attract funds and investment. There are several different ways to raise capital with a limited liability company. This can include the issuing of new shares which are purchased by new shareholders to bring capital into the venture. Capital can also be raised by offering the firm as security or collateral for a mortgage or debenture that the company takes on. This allows more options and more security for the lender. Companies can secure a loan more cheaply and more easily than individuals.

How to register a business name is a question many entrepreneurs ask when they start their first business. Along with this question there are more questions that should be answered before you register a business name. Consulting a business lawyer, certified public accountant and or a tax lawyer to help you with the answers is advisable.

Some examples are: What will the legal structure of your business be? Will your business be a sole proprietorship? Will your name be your legal name or a fictitious name? Will you need a tax ID? Will the business name infringe on any trademarks? Will you need to obtain any of the answers to these questions in order to help you decide what type of business entity to establish. Once the entity is established then you will know which guidelines to follow to register your business name.

The actual process to register a business name is usually fairly simple. In most cases a form is provided for you to complete and provide the needed information to the proper government office and in a few days or weeks the name gets approved. The guidelines to register a business name are independent to the state you are doing business in.

These guidelines can be found at Business.Gov business name registration website. Each state has different guidelines and offices for registering. This is a list of some of the places you can register your business name in different states; your county courthouse, online application, the Secretary of State, Parish Clerk of Court, to name a few. Not all states use the same process.

So when you are in the process of finding out how to register a business name, remember to ask yourself some of the questions I listed above and seek professional advice. The actual process to register a business name is usually quite simple and if the proper research is done prior to registering, it will stay simple.