STARTING A NEW BUSINESS: FACTORS EVERY ENTREPRENEUR SHOULD ADDRESS

Deciding to become an entrepreneur and building a new venture is an exciting, yet daunting, experience. To maximize the excitement and minimize the anxiety associated with starting a new business, the participants must address several factors, both legal and financial. Consideration of these matters prior to formation of the business will increase the likelihood of the business's success and the avoidance of future problems.

In particular, the following legal matters should be addressed by the participants prior to opening their doors to the public.

Register Trade Names

Unless the business's name consists of the owner's legal name and describes the business engaged in (e.g., John Doe Video Rental), the business must register its name by filing a fictitious business name statement. The business should also consider registering the business name as a trade name or internet domain name to prevent another business or person outside the county from using the business name.

Legal Form of the Business

Most businesses are created using the following business forms: sole proprietorship, partnership, corporation, and limited liability company (LLC). The legal form of the business has an effect on several factors, including taxes and limited liability for the proprietor against claims made against the business. Entrepreneurs should consult an attorney to determine which form will provide the best fit for their business.

Execution of a Written Operating Agreement

If the business is to have more than one owner, the owners should draft and sign a written agreement setting forth how the business will be managed, how important decisions will be made, how profits and expenses will be allocated, and the rights of each co-owner in the event one owner wishes to sell his interest in the business or the business is dissolved.

Obtain Licenses and Permits

Various licenses and permits may be required for the business to operate. In addition, if your corporation, partnership, or LLC conducts business conducts business outside of California, a "foreign corporation" permit may be required in the second state.

Please remember that these materials have been prepared for educational purposes only and do not constitute an exhaustive list of factors to consider. For example, new businesses generally should also obtain applicable insurance and tax permits. Furthermore, this article does not constitute legal advice nor legal opinions on any specific matters. Readers should always consult with an attorney prior to starting a new business.

This article originally appeared in The Newspaper, a community newspaper serving the communities of Solana Beach, Cardiff by the Sea, Encinitas, and Leucadia, California.