Starting a business is not easy. You must think about a lot of things, from making a product or or introducing a service that appeals to your target audience to creating an effective website, handling finances, marketing your business, or managing the business in general. That is why a lot of people give up even before they get started. Thankfully, working with a Phoenix business formation lawyer can make it easier to start a business. An attorney can help determine the right business structure for your business or draft agreements and contracts for you. Below are the main reasons you need an attorney when starting a business in Phoenix:
Make Informed Decisions
Before you start incorporating your business, you must have a good idea first. Your attorney can assess your idea and provide you with honest feedback about its potential for success. Also, they can connect you with the resources you need to get the business off the ground. They will ensure you make informed decisions from the get-go.
Understand Requirements and Protocols
When you start a business, there are requirements and protocols you must follow and meet. Incorporating the business, drafting business contracts, and understanding related laws can be quite confusing. Failing to follow proper procedures can result in legal issues or even a business shutdown. Your lawyer will make sure you follow all requirements and protocols to avoid legal issues.
Pick the Right Business Structure
Your chosen business structure has long-term implications for the business, so take it seriously. Your lawyer can explain the pros and cons of every kind of structure and help you pick the right one for you. Below are legal structures to choose from:
- Sole proprietorship. In this kind of structure, one person owns and operates the business. Setting up and operating under a sole proprietorship is easy and it provides some tax benefits. But as the sole owner of the business, you are liable for its obligations and debts.
- Partnerships. Two or more people own this type of business. Partnerships can be general or limited. While a general partnership is easy to set up, it offers just a few legal protections for partners. Meanwhile, limited partnerships provide greater legal protection; however, they can be costlier to set up.
- Corporation. This structure provides limited liability for shareholders. Setting up a corporation is complex and expensive, but it provides some benefits. For instance, it lets you raise capital by selling stocks.
- LLC or limited liability companies. This business structure provides owners with limited liability. Setting up this type of business is easy and it provides some tax benefits. But with this structure, you may need to pay self-employment taxes.
Help with Tax Law Issues
Businesses have tax obligations to fulfill. As a business owner, you must be aware of all applicable taxes to avoid penalties and fines. Your lawyer understands tax laws and can explain the rules and regulations that your startup must follow. They can prepare your taxes every year, file forms or reports, and handle audits if necessary.
As your organization grows, you need a lawyer who can help you stay compliant with ever-changing tax laws. By following IRS rules, you can avoid fines and penalties.
Help Protect Your Assets
A lot of startups fail because they do not pay their debts. This can happen because of various reasons like not having sufficient revenue or taking on more debt that a business can afford to pay.
When you start a business, you must know how to protect your assets from creditors. Asset protection can be done by establishing a limited liability company or a trust. Also, filing for bankruptcy is an option to discharge some of your debts and keep certain assets.