Starting a new business is an exciting time for a business owner. Many times the idea to start a business comes up quickly and spontaneously. While the desire to move quickly is understandable, moving without a plan in place is likely to see that business fail just as quickly.
The starting point for a new business should be a business plan. Where are you getting your customers? Do you need to borrow money to buy inventory, pay employees, etc? How long will it take to be profitable?
Once you’ve crunched the basic data, it’s time to decide which professional advisers you’re going to use. Speaking to a lawyer and/or accountant might seem like a big expense at this point in the business, however, spending $ 500.00 to get professional advice early on will save you literally tens of thousands of dollars in litigation later. It’s worth the expense to talk through your options for carrying on business, both from a liability and tax perspective.
If the business carries on business through a corporation with more than one shareholder, a shareholder’s agreement is important. This can set out the responsibilities of shareholders to each other as well as set out how to deal with shareholders leaving the company.
If the business involves being paid over time by customers, ensuring you have written contacts that includes terms Courts will uphold is important. The days of business by handshake are over: if it matters, write it down.
If the business is hiring employees, using an employment agreement is very important so that you are able to control the amount of notice you need to give employees before terminating them without cause. Don’t wait until you have “the money” for this: hiring an employee without a contract means they could be entitled to one month per year of service as notice (or more) and that is incredibly expensive.
Our firm enjoys working with new businesses and is sensitive to the costs associated with giving that advice. If you have a new business idea and would like to plan it out, reach out to us: we’re here to help you succeed.