If you want to save money on taxes and protect yourself from liability, you have to think about business entity formation. It could be a limited liability company (also LLC) or a whole corporation which is legally a different “person” from its owners. Below are some useful tips on business entity formation from a firm of professional attorneys McKoon, Williams, Atchley & Stulce.
Filing Formation Documents
To start the process, you have to submit a form with the state agency that handles business filings (generally the secretary of state) together with a filing fee, which differs from one state to another. In Tennessee, this makes $50 per member (minimum of $300 and maximum of $3,000). Once the state obtains and also processes your formation documents, you’ll receive a certificate verifying that your new company officially exists.
In addition, every business entity should have records that explain the rights and responsibilities of individuals who own and run the business. Although these records are not submitted with the state, they are very important guidelines for operating your company and can help to avoid pricey conflicts later on.
Setting Up Financial as well as Tax Accounts
It’s important to separate your personal expenses from business ones. The best ways to achieve it are:
- Obtain a federal Employer Identification Number (EIN). A lot of companies need to have an EIN, business equivalent of a Social Security number.
- Open up a business bank account. Take your business formation certification as well as EIN to a bank or credit union to open a business account. Think about getting a business credit card as well.
- Register with state and local taxing and licensing firms. You must register with your state taxing authority to pay state taxes, including income and sales tax. If you hire people to work for you and your company, you must likewise pay various employment-related taxes.
Getting Business Insurance
By forming a business entity, you could safeguard your personal possessions in case of lawsuits against the company. However, it cannot protect business from possible terrible losses caused by personal injury lawsuit, fire, theft, flood or data breach. For that sort of defense, you require business insurance coverage. There are several sorts of business insurance for different kinds of threat.
Any business needs contracts to cover even their most common deals. Remember, unless your agreement is done in a written form, it’s not valid in terms of law. Our Chattanooga business lawyers know all the pitfalls that may waylay business owners. The basic set of contracts every business owner should have includes:
- Nondisclosure agreement (NDA). Shields the business’s confidential information by calling for people to keep details concerning your business private.
- Employment contracts. Provides written employment terms.
- Intellectual property assignment. Permits the transfer of property legal rights while securing the rights of all parties.
- Terms and Conditions. Specifies the rules regulating using a website.
Written agreements are essential because they assist prevent misconceptions as well as make it much easier to enforce a contract in court.
Staying Up-to-Date with State Agencies
Tennessee laws require business entities to keep certain documents. These might include meeting minutes, resolutions and also ownership records. You might also need to file a yearly report and pay an annual charge. The guidelines vary based upon the sort of entity, so consult an experienced business lawyer for more information about your responsibilities.
McKoon, Williams, Atchley & Stanley, PLLC organizes business entities, ranging from sole proprietorships and partnerships to corporations and limited liability companies (LLCs). Our clients include existing businesses and startups, as well as founders of closely held companies, professionals, and investors in real estate. If you are looking for a lawyer, schedule a free consultation. (Please do not include any confidential information in your inquiry.)