This is an interview with business and corporate attorney Joe Gottlieb -- discussing some important LEGAL issues you need to consider as your company gets off the ground.
Q: TELL ME ABOUT YOUR LEGAL SERVICES.
A: I provide legal services to self employed people and small to medium size companies. My services are TRANSACTIONAL rather than litigation based. I provide general counseling that may include issues such as choice of entity issues for start-ups and preparation / review of contracts and agreements of all types. I also represent buyers and sellers of businesses in purchase or sale transactions, and I work with franchisers and persons purchasing franchised businesses.
Q: WHO IS YOUR TYPICAL BUSINESS CLIENT?
A: My typical client is a closely held business (with only owner or a few partners), usually in a SERVICE industry. My clients include retail businesses, professional practices, as well as self employed persons.
Q: WHAT IS THE FIRST QUESTION YOU ASK A START-UP?
A: The first questions I ask relate to the business, or proposed business itself. I need to have an understanding of the operational side of things so that I can better address their legal needs. I avoid a COOKIE CUTTER approach -- all businesses will have particular needs, all business owners will have a different risk-tolerance, and each person I talk to has different goals for their business. That's why knowledgeable legal advice is so important -- new entrepreneurs need someone who has had experience with many different kinds of businesses, and who can help recognize the QUESTIONS that they (the business owner) don't know to ask.
Q: HOW DO YOU SELECT THE RIGHT BUSINESS ENTITY?
A: The decision is typically driven by two considerations -- liability and tax issues. Forming a legal entity will create a shield of LIABILITY for the principals, thereby protecting their personal assets from persons with claims against the business. For many businesses, remaining as a sole proprietorship may suffice with adequate liability INSURANCE. But forming an entity also gives a business greater flexibility to raise capital, bring in investors, and give the appearance of a larger business. From a tax perspective, forming a corporation or Limited Liability Company may give the owner the ability to save money on self-employment TAXES. The type of entity (S-corporation, C-corporation, Limited Liability Compay, etc.) is also driven by such factors as the number of shareholders, citizenship status, and the state where the business is located.
Q: WHAT ARE THE MOST IMPORTANT START-UP ISSUES?
A: The biggest practical legal issue involves the documentation needed -- proper AGREEMENTS -- to set fees for services and collecting fees for services/goods sold. If the business will use a trademark or service mark, the owner also needs to do some research to avoid INFRINGEMENT claims.
Q: WHAT IS THE BIGGEST LEGAL MISTAKE YOU SEE?
A: The most common mistake new entrepreneurs make is the lack of sufficient operating CAPITAL to see the business through its formative stage. Most new business owners underestimate the funds needed to run the business and to live at the same time. This often leads small businesses to try and skimp on seeking valuable professional ADVICE right at the beginning of their venture -- from attorneys, accountants, and insurance agents who can protect them from future liabilities. And unfortunately, itís often too late (or very expensive) to go back and do it right once youíve already done it wrong.
Q: ARE THERE ANY GOLDEN START-UP RULES?
A: Do a thorough job of due DILIGENCE, consult with experts (accountants, lawyers, etc.), research market trends, and be REALISTIC about the time commitment needed to be successful.
Q: ANY ADVICE FOR START-UP ENTREPRENEURS?
A: The best advice I could give is to find a good ATTORNEY and an ACCOUNTANT. Spending a few dollars on the front end will save you time, energy, worry, and money over the long-run..
Joe Gottlieb is a partner with the law firm Hassett, Cohen, Goldstein, Port, & Gottlieb -- a law firm focusing on the special needs of entrepreneurs and companies in the new economy. Joe specializes in business transactional matters, including choice of entity, preparation of business agreements, the purchase / sale of a business, and franchise arrangements. You may contact Joe at or 770-393-0990 x 105 -- or visit his firmís website at >www.internetlegal.com.
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