Starting a business can be very exciting, but it’s also can be risky. There are key steps to take when starting a business to help provide the legal framework and protections for the business.  Laying the right foundation early can minimize costly mistakes. Here are some important considerations when starting a business.

Choosing a Business Entity

The type of business structure you choose will affect everything from taxes to liability protection. Thus, it is important to consider your proposed business venture and what entity structure is appropriate. Some options are:

  • Sole Proprietorship – usually simple, but little to no liability protection.
  • Partnership – shared responsibility, but also shared risk.
  • LLC (Limited Liability Company) – flexible management but usually with some liability protection.
  • Corporation – best for raising capital, but more formalities.

Once formed, your business also needs governing documents such as bylaws (for corporations) or operating agreements (for LLCs) to outline decision-making and ownership rights.

Licenses and Permits

Before you open your doors, determine what approvals are required for your business to legally operate. Do you need any or all of the following (and there could be more):

  • General business license from the Secretary of State.
  • City or county licenses, depending on where you operate.
  • Industry-specific permits e.g., health department permits for food businesses.
  • Land use or zoning approvals from planning departments.
  • Tax permits if your business will collect sales or excise tax.

Missing a required permit can lead to fines or delays, so this is a critical first step.

Contracts and Key Provisions

Contracts form the backbone of your business relationships. Some contracts you’ll may need when starting your business include:

  • Vendor or supplier agreements
  • Client contracts
  • Employment agreements
  • Lease agreements

These contracts often lay out the key terms relating to the operations of the business. A poorly drafted contract can turn a small disagreement into an expensive lawsuit.

Why Work with a Business Attorney?

Many entrepreneurs wait to hire an attorney until a problem arises, but by then, it’s often more costly to fix. A business attorney can:

  • Help identify required licenses and permits.
  • Advise on the best entity type for your goals.
  • Draft governing documents that outline ownership and provide mechanisms for internal disputes
  • Review and negotiate contracts to protect your interests.

Building a business is more than just having a great idea, it’s about how the business is structured and the legal foundation created. By securing the necessary licenses, forming the best entity for your business, putting proper documents in place, and working with a trusted business attorney, you can give your venture the best chance at success.