For the past eleven months, many corporate employees forced to work from home have found the transition to be a double-edged sword, replete with obvious disadvantages, as well as several maybe less expected advantages. This alternative-office trend is likely to continue for the foreseeable future. Finding themselves without a traditional job, many have sought out an entrepreneurial track by launching businesses of their own. To some degree the lockdown has served as a catalyst, and the past year has seen a surge of startups. Ensuring that your business is set up properly from the beginning can prevent unnecessary headaches in the future.
Questions to Ask Before Kicking Off Your Business
While you may be excited to get things going without dealing with all the legal minutiae involved in properly starting your business, attending to each and every corporate document required is strongly advised.
Even a strong business product and model will require unnecessary time and capital if you’re not asking the right questions of the right people. We’ve outlined a few basic questions to ask before launch, and the answers that apply to most small businesses. As always, we recommend a thorough consultation with a business lawyer and a skilled CPA, to talk through the specifics of your business plan in order to make sure you’re on the right track.
One of the most important preliminary considerations is what entity to utilize when forming a business. Some of the issues that might have a major impact on your entity decision include the inherent liability exposure you may have given your product or services, avoiding paying excessive self-employment tax, the expected amount of your earnings and deductions, whether or not you plan to have a partner or investor(s) involved, and of course, the administrative costs and demands of setting up and maintaining certain entities.
After a thorough examination of the above issues, your business counsel will be able to advise as to what entity you should decide upon. The options are many and include sole proprietorships, partnerships, limited liability companies, and both C-Corporations and S-Corporations. We will delve into the basic advantages and disadvantages of each of these in a separate posting as the details and concerns are numerous.
Once you do choose a business structure, you should consider several other important questions: what corporate documents do you require to create your company? What regulations must you comply with, both initially and periodically? What kind of control do you want to have over your company? Do you intend to create intellectual property? How will you protect it if you do?
What trends might affect my startup going into the new year?
2020 was a very defining year for entrepreneurs and the Covid-19 pandemic propelled a variety of business trends. Remaining adaptive is essential. National lockdowns, forced closures, and future pandemics are no longer unforeseen ideas.
With that in mind, e-commerce, automation, and remote work have all become the new normal and will most likely continue to be in 2021. Brick-and-mortar storefronts may be unnecessarily expensive and commercial leases have proven to be a huge liability in circumstances where forced closures are very possible to protect public health and safety.
Additionally, the implementation of work-from-home models may lead to the questioning of the need for physical office space in general. What is more efficient? Technology has always been a method to save on labor costs, but also to protect the health and safety of employees. Many shifts in this direction have already occurred. Warehouses, supply chains and vehicles are all steering towards full automation and, albeit to the chagrin of most, chatbots have largely automated customer service inquiries.
Every year has its challenges for entrepreneurs but 2020 was … special. Business owners will feel the impact for years to come. Properly preparing yourself and your business for early on will make your journey smoother overall, which is why taking the time to consult with a corporate lawyer is worth it. Think about it this way, if you can create a startup and turn it into a successful company during times like these, the world has nothing more difficult that it can throw at you.
If you have any questions about your potential startup, please don’t hesitate to reach out to us. We’re always happy to help!