This document provides 10 considerations for private and emerging businesses, including: assembling a professional team of advisors; developing a business plan with exit strategies; selecting an appropriate business entity; fulfilling tax and employment obligations; separating personal and business finances; being careful with multi-level marketing strategies; and complying with healthcare laws. It also discusses expanding a business through new offices, mergers, acquisitions, or subsidiaries and using termination letters when partners or members leave the business.
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Private & emerging business attorney & lawyer
1. Top 10 Private and Emerging Business Considerations
For Public and Private Companies
2. Assemble a Good Team
Professionals can help to start a business effectively. A
professional team decreases the potential problems
that result from not having the right people in place.
3. Assembling a good team by engaging an attorney, an
accountant, a business banker, and an insurance agent,
depending on the nature of your business, saves time and
money in the long run.
4. Develop a Business Plan that Includes Exit
Strategies
Developing a solid business plan is helpful for you to think
through all aspects of starting a business and thus, to
decrease risks of blind investments and financial losses.
5. Including exiting strategies in your business plan reassures
members (of a Limited Liability Company) or partners (of a
partnership) that they can safely withdraw their contributions in
the business.
6. Select an Appropriate Business Entity
Different kinds of business entities have different advantages and
disadvantages. With over 17 different types, it is key to review the details
and long-term goals of your business with your attorney before selecting a
business entity.
7. For example, a Limited
Liability Company (LLC)
can insulate business
losses from its owners’
personal assets. A
General Partnership
does not have such an
advantage, but can give
its owners more control
over the business than
an LLC does.
8. 1 Advising Small
Businesses §§ 2:12
and 14 (2012). A
lawyer can help a
business to select
an appropriate
entity form which
suits its needs best.
9. Select a Distinguishable Name for Your
Business
For most business entities, a distinguishable name
is required to file formation documents.
10. 2-21 Ohio Business Entities §
21.02 If your business grows and
you want to use the name of your
business as a trademark, the
name must be unique and
distinguishable to be registered
as a trademark. Abercrombie &
Fitch Co. v. Hunting World, 537
F.2d 4 (2nd Cir. 1976).
11. Fulfill Tax and Employment Obligations
Starting a business requires familiarity with several fairly
complicated tax and employment issues. Use the expertise of
your lawyer and accountant to make sure everything is
addressed. At minimum, a business needs to file or apply for
a/an:
12. Taxpayer Identification Number
New Hire Report
(TIN)
Employer Identification Number
(EIN) Commercial Activity
Entity Classification Election Tax Registration
Registration as a Withholding
Vendor’s License
Agent for Employee State Income
Tax
13. Do Not Commingle Your Business and Personal
Affairs.
To effectively insulate business losses from your personal
assets, set up a business checking account and never
commingle funds of your business with your own money.
14. Be Careful with Multi-Level Marketing
(MLM)
MLM is a marketing strategy where sales members of
the program are compensated not only for sales they
generate, but also for new members they recruit.
15. In the matter of Koscot
Interplanetary, Inc., 86
F.T.C. 1106 (1975).
Although MLM can be
legitimate, be very careful
if a business decides to
adopt such a marketing
strategy. Make sure that
your business is selling an
actual product or service
and adopts and enforces
effective policies
encouraging retail sales.
16. Comply with the Health Care Affordability
Act.
Although the Act will not be fully effective until January
1, 2020, there are several provisions a business is
required to comply with NOW, including...
17. Obligations to provide a summary of benefits and coverage
Obligation to report aggregate cost of employer-sponsored health
coverage on an employee’s W-2
$2,500 annual limit on an employee’s salary reduction
contributions to a Health Flexible Spending Arrangements
18. Choose an Effective Way to Expand Your
Business
When a business grows, it may want to establish an office in
another city or to create a new line of business. To explore a new
market, a business can set up either a branch or a subsidiary.
19. A business can set up a subsidiary in one of the
following three ways:
Acquiring an existing business
Merging with an existing business
Forming a separate business entity
In determining which best fits your business needs, you
will consider various factors, including the financial
situation of the business, its risk-bearing capacity, and the
degree of control it desires over the new subsidiary.
20. Use a Termination Letter
If a partner (of your partnership) or a member (of your LLC)
would like to leave your business, use a termination letter to
make sure that all previous contractual relationships between the
leaving partner or member and your business are terminated
and his/her action can no longer bind your business.
21. For business legal assistance contact:
Gonzalo Law LLC
Cleveland, Ohio 44114
T: +1.216.527.7777
F: +1.216.691.2714
E: ngonzalo@gonzalolaw.com
W: www.gonzalolaw.com