Legal Tips for Starting Your Own Business
By Andrew J. Goldberg, Kemp Klein Law Firm, (contact info below)
Choice of Entity and Tax Issues
The type of entity you choose is critical to protecting your business and personal assets from creditors and ensuring you minimize your taxes. However, there is often a tradeoff between the best entity for liability protection and taxes, and the complexity of operating them. Finding this balance is important so you can focus on the key task of winning clients and delivering your service or product. If you have clients in states other than Michigan (even if you do not have an office there), or have employees, you will also have additional tax issues to address.
Insurance is an often-overlooked area and one where people try to save money; however, a good insurance policy and coverage is worth its weight in gold. As well, many of your clients will insist that you carry insurance. Issues you should address include the standard business and liability coverage, but you should also consider overhead protection, business interruption, and intellectual property coverage.
No one wants to start a business and not get paid. Having a rock solid contract can ensure your efforts are well rewarded and your business stands on solid financial footing. Key issues to consider are whether to get a retainer, what expenses will be passed through to clients, when invoices are due, who owns work-product until final payment is made.
Having experienced accountants, attorneys, insurance advisors, and lenders can be critical to your success. Many of these people have been through the business start-up phase before and can help you avoid known pitfalls. Take time to select these key advisors. Interview them, and get references.
Protecting Your Proprietary Information
Whether you hire employees or just sub-contract out certain work, your company will have proprietary information that may give it a competitive advantage over other businesses. It is critical that you take steps to protect this information. This may be in the form of a Confidential Agreement, or in certain cases, Nonsolicitation Agreements. Courts are very particular about how these types of Agreements are written and enforced. Make sure your document will withstand challenges.
Andrew J. Goldberg
Kemp Klein Law Firm
201 W. Big Beaver Rd., Suite 600
Troy, MI 48084
Ph: (248) 740-5664
Fax: (248) 528-5129