Business Formation
Begin with Business Formation Advice from
Colorado Business Attorney Elizabeth Lewis
Starting a new business is a complex process that involves addressing a variety of important legal matters. It’s critical to handle these items properly to minimize legal risks down the road and set your business up for long-term success. Working with an experienced business formation lawyer is essential to ensure your new company’s legal structure, tax structure, legal paperwork, and basic contracts with vendors, clients and employees are handled correctly.
Denver business attorney Elizabeth Lewis has worked with hundreds of small businesses and can provide you with the expert business formation advice you need to navigate this complex process. Elizabeth knows the state and federal regulations governing the formation of new businesses, and she can ensure you comply with these regulations while providing important legal protections your business will need now and into the future.
Why Do You Need a Lawyer to Start Your Business?
The legal hurdles associated with starting a new business can be overwhelming. Working with an experienced business formation attorney is critical to ensure every aspect of this process is addressed in adherence with Colorado law (or for those clients in North Carolina, North Carolina law). You’ll experience a variety of benefits when you work with a business formation lawyer:
- Compliance – It’s critical for your business to remain compliant with all local, state, and federal laws. Without intimate knowledge of these laws, you may be at greater risk of incurring costly legal penalties associated with noncompliance.
- Liability – Operating a business exposes you to significant liability. Having the assistance of a business formation attorney will help limit this liability in the event that you face a lawsuit or audit by a government agency down the road.
- Risk management – There are many legal risks associated with starting a business, as every interaction with employees, customers, vendors and guests on your premises can expose you to legal action. An experienced business formation lawyer can help you identify these risks in advance to minimize your exposure once your business is up and running.
- Tax liability – The tax laws governing businesses are highly complex, and it’s critical that you remain compliant with all regulations. An experienced business formation lawyer can help you understand the taxes you’re required to pay, the deductions and reimbursements you may be entitled to, and the best approach for staying on top of your tax filings. In addition, Elizabeth Lewis has a network of CPAs and bookkeepers that she works with that she can recommend to make sure that your legal and accounting team have a good working relationship both with you and each other.
- Contracts and agreements – When you start a new business, you’ll need to draft a variety of contracts and other legal documents governing various relationships with others who work with your business. Having these agreements crafted by an experienced business formation attorney will ensure they clearly state the roles and expectations of everyone involved, reducing the risk of potential legal issues down the road.
Selecting the Legal Structure of Your New Company
A well written and thorough business plan is essential when forming any business. However, this plan can only serve as a road map to the future if it is built on the solid foundation of a well thought out legal structure and includes the correct business formation documentation. You may need to file with a variety of entities, including:
- The State of Colorado
- The IRS
- Other state and federal agencies (depending on the nature of your business)
Choosing your business structure has implications for ownership issues, including:
- Disputes between owners
- Whether you have limited liability
- How your company is seen through the eyes of the law
- How the company can be taxed
- How owners compensation is treated for tax purposes
After you choose a business structure, you will have documents that outline the owner’s rights and responsibilities. The documents that you enter into between yourself, the company and the other owners can have long lasting effects on your business. Discussing your vision for the future with an attorney who is experienced in writing these documents can make the difference between a successful company and a failing one.
If you are already operating and wondering if the structure you chose was the right one for you, you may want to speak with a Denver business lawyer about whether you should convert your current business structure into something more appropriate for your needs moving forward. If you haven’t selected a business structure yet, make sure you speak with a small business attorney before you do.
What Are the 4 Main Types of For-Profit Business Structures?
There are several ways to structure a for-profit business:
- Sole Proprietorship
- Partnership
- Limited Liability Company (LLC)
- Corporation
There may also be additional structures if you are non-profit or want to provide benefits to others as well as the owners of the company (benefit corporations).
Sole Proprietorship
A sole proprietorship is a non-registered, unincorporated business run solely by one individual with no distinction between the business and the owner. In a sole proprietorship, you’re entitled to all profits, but you’re also responsible for all the debts, liabilities and losses associated with the business. In addition, your business assets and liabilities are comingled with your personal assets and liabilities, so you can be held personally liable for any debts and obligations associated with the business.
This business structure may be a good option if you have a low-risk business or if you want to test your business idea before forming a more formal business. However, because you are personally liable for any issues that occur with the business, you will want to speak to a business attorney prior to operating this way.
Partnership
A partnership is the simplest and most straightforward business structure in situations where two or more people own the business together. There are two different types of partnership structures:
- Limited partnerships – These businesses have one general partner with unlimited liability, while all other partners have limited liability. In most instances, the partners with limited liability will have less control over the company than the general partner, and the amount of control each partner wields will be clearly stated in a partnership agreement.
- Limited liability partnerships – In these businesses, every owner has limited liability. This protects each partner from debts against the partnership and shields everyone from liability for the actions of the other partners.
This business structure may be a good option if your business has multiple owners, or if you are a professional group (such as attorneys). However, because with general partnerships you are liable for anything the partnership does, again, you will want to speak with a business attorney to determine if this structure is right for you.
Limited Liability Company (LLC)
A limited liability company (LLC) combines the benefits of corporation and partnership business structures:
- The owners’ personal assets are protected from liability in most incidents
- Profits and losses can be passed through to your personal income without facing corporate taxes depending on the tax structure of the business
This business structure may be a good option for medium- or high-risk businesses, or when owners have significant personal assets that they want to protect from liability.
Corporation
A corporation makes your company a legal entity that is separate from its owners. It provides the strongest protection to owners against personal liability. However, the formation costs are higher and there is more extensive reporting, operational processes and record keeping required.
This business structure may be a good option for medium- or high-risk businesses, businesses that plan to go public in the future, or businesses that need to raise money from investors.
Business Formation Services We Offer
The Law Office of E.C. Lewis offers the comprehensive business formation services necessary to set your new company up for success. These include:
- Selecting the legal structure of your new company
- Selecting the tax structure of your new company
- Drafting all essential contracts associated with starting a new business
- Drafting and reviewing your company’s procedures, policies, articles of organization and corporate bylaws
- Managing employment issues, including drafting employee policies, handbooks, creating non-compete and nondisclosure agreements, etc.
- Assistance with the legal aspects of financing and lending matters
- Ensuring compliance with all federal, state, local and industry-specific regulations governing your business
Selecting the Tax Structure of
Your New Company
Selecting the tax structure of your new business is just as important as selecting your legal structure. Many people think their company’s legal structure and tax structure are the same thing; however, they impact different aspects of your business:
- Your legal structure affects how you are treated if something happens to your company legally, such as a dispute among owners or a lawsuit against your business
- Your tax structure governs how your business is treated for tax purposes and whether you pay owners as employees or through distributions
There are several ways to structure your business for tax purposes:
- Sole proprietorship
- Partnership
- S-corporation
- C-corporation
While it is best to be set up correctly from the start, existing business owners want to speak with a Denver business lawyer about whether you should convert your current tax structure into something more appropriate for your needs moving forward.
Review Contract Laws
Startup business contracts can include operating agreements, franchise agreements, leases, vendor agreements and more.
A Colorado business attorney can help you cover your bases.
Contract Law and Your New Company
Elizabeth Lewis can also help you with the basic contracts you will need as you begin and expand your new business. Contracts are legal documents. If you wind up in court over a contract, you will want your attorney to have read and/or written most of the contracts you entered into. Elizabeth Lewis will make sure all your contracts are written with your best interests in mind and if these contracts are written by someone else, she will review them to ensure they provide you with the legal protection your business needs.
While the dollar amount may seem like the biggest factor in whether to have a business formation attorney such as Elizabeth Lewis write or review your contract, there can be many other issues, such as intellectual property matters, which make it critical for small dollar contracts to be reviewed as well. Taking this step will ensure the contracts you enter into don’t place you in a legal bind.
Startup business contracts can cover a variety of matters, including:
- Operating agreements
- Franchise agreements
- Leases
- Vendor agreements
- Employment and independent contractor agreements
- Nondisclosure agreements
If you are going to purchase software or have a website, you will need to understand software licensing contracts, and you will need to establish website privacy policies and website terms of use.
Elizabeth Lewis can help you cover your bases to ensure these contracts are structured properly.
Get Advice Before Starting Your New Business
Getting advice on how to start your business can set your new company up for success both now and into the future as your business grows and changes. Elizabeth Lewis has been helping small and medium sized businesses in Denver and throughout Colorado with the legal matters associated with business formation since 2007. She understands the complex legal issues associated with forming a business, and she knows the state and federal regulations governing this process. This extensive expertise will ensure your new business has the important legal protections it needs to navigate the multitude of challenges that may lie ahead.
If you are starting a new business in Colorado, contact the Law Office of E.C. Lewis today to schedule a consultation. Elizabeth Lewis is a business formation lawyer serving Denver and throughout Colorado.
Multiple Ways to Serve You
The Law Office of E.C. Lewis, P.C. understands that not all business owners can take the time out of their busy schedules to come to an office, appointments are available by phone, online, and through video-conferencing for those individuals who are on the go. Contact the Law Office of E.C. Lewis, P.C. today to schedule an appointment!
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Law Office of E.C. Lewis, P.C.
Your Denver Business Attorney
LICENSED IN COLORADO AND NORTH CAROLINA
Mailing Address:
501 S. Cherry Street, Suite 1100
Denver, CO 80246
720-258-6647
Elizabeth.Lewis@eclewis.com
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Real Estate Services for Business Owners
Elizabeth Lewis provides the following real estate law services to small and medium sized business owners in Denver and throughout Colorado:
- Commercial real estate purchases
- Legal review of commercial real estate leases
- Protecting your assets