Starting a new venture, whether it is a tech startup or e-commerce store selling homemade goods, you will need to make sure to protect your business. From picking a business form to adopting bylaws that determine how your company will operate, to protecting your intellectual property through trademark or copyright, laying the right legal framework at the outset is critical.
Choosing A Business Structure
Choosing the appropriate business structure that best fits you or your team’s vision for your venture is essential. There are a number of business forms to choose from, all with different liability and tax consequences. Under Kentucky law, individuals may choose to form a limited liability company, C corporation, S corporation, or a cooperative company just to name a few. Understanding the ins and outs of the laws governing each of these types of structures can help you pick the one that best fits your needs.
Document everything in writing!
The rule of thumb in business is to put everything in writing, even when it seems like a simple transaction between friends, laying out the terms at the beginning can help avoid problems later down the road. We can review a contract, commercial lease, or other legal business documents sent to you and provide advice on clauses and negotiating more favorable terms. We can also draft a contract specifically for your business needs. Check out my blog on important clauses for freelancers here.
Multi-member Operating Agreement
If you are seeking to open a limited liability company with one or more members, an operating agreement is absolutely essential. I find individuals often come to me seeking to divide up ownership in a company equally among the owners, but this can lead to a deadlock when members can’t agree. Operating agreements help avoid these types of problems from arising and can act as a roadmap in helping resolve them when they do occur. Operating agreements outline how decisions will be made in the company and how profits will be divided among owners. If you are planning to open a company with other individuals, you can head off future problems with an operating agreement. Check out my blogs on what goes into an operating agreement here and here.
Before you can start your business you'll need a plan. For the successful operation of your business you will need to identify revenue streams, pinpoint your customer base, develop innovative products, and outline the details of financing. A Business Model can help you identify these, download one below.