| I've gotten several questions recently about | | | | entity. |
| the legalities of starting a business. So, | | | | |
| this week I thought I would address a few of | | | | Will a corporation protect me from liability? |
| the more common legal issues most new | | | | It can, if handled correctly. You may have |
| businesses face. But first, let's get the | | | | heard about the "corporate veil," which means |
| mandatory legal disclaimer out of the way: | | | | that you can't be sued personally for |
| the advice dispensed by this columnist is | | | | anything that happens in the corporation and |
| probably no better or worse than the advice | | | | your personal assets can't be attacked by |
| dispensed by other columnists. Do not take | | | | creditors or a lawsuit on the corporation. |
| the following advice as gospel or bet the | | | | But in order to have this protection, you |
| future of your business on any advice given | | | | must act like a corporation. This means |
| herein by said columnist. | | | | conducting board meetings, taking notes and |
| | | | publishing minutes in your corporate book. |
| Agreed? Good, let's proceed. | | | | |
| | | | In addition, be sure to have a separate |
| To begin, here's the best legal advice I can | | | | corporate checking account and, if you need |
| give you as a new business person: find | | | | them, corporate credit cards. Don't use |
| yourself a good lawyer and make him or her | | | | corporate money for personal purchases, and |
| your very best friend. Granted, your new best | | | | vice versa (unless you file an expense |
| friend will charge you an hourly fee for | | | | report). Many people think they don't need to |
| chatting on the phone or talking business | | | | go to all this trouble if there is just one |
| over lunch, but you'll find it to be money | | | | or two people in the company, but in order to |
| well spent. A good attorney can save you far | | | | be treated like a corporation, you must act |
| more than the cost of his services. I rarely | | | | like one. Your attorney can give you more |
| make any decision that has the potential to | | | | details. |
| impact my business without first consulting | | | | |
| my attorney. | | | | How do I register my company name? To |
| | | | register your company name simply contact the |
| You can locate an attorney through legal | | | | office of the Secretary of State. This is |
| referral services or just by opening the | | | | easily done by phone. The registrar will tell |
| phone book, but the best way to find a really | | | | you if the name you have in mind is available |
| good attorney is to ask other business owners | | | | as a corporate name and will reserve the name |
| for references. | | | | for you if it is available. You will be sent |
| | | | a form to complete and submit with a nominal |
| You want an attorney who specializes in | | | | fee. For more information you can also visit |
| business matters. A few of the things you may | | | | the Secretary of State's website. |
| need legal help with are: legal business | | | | |
| formation, articles of incorporation, | | | | Do I need a business license? Nearly every |
| trademarks and copyrights, investment | | | | business will require a county or city |
| documents, employee policies, etc. You may | | | | license. Luckily, such licenses are |
| find that a single attorney can't meet all | | | | relatively easy to obtain and are not |
| your needs, but if you use a larger firm they | | | | expensive. For local licensing requirements, |
| will have attorneys on staff that can provide | | | | contact your city or county government |
| the specialized services you require. | | | | offices. |
| | | | |
| Now, let's take a brief look at a few | | | | Some businesses might also require a state |
| questions I've received regarding the | | | | license. For example, hair stylists, |
| legalities of starting a new business. | | | | contractors and most businesses serving food |
| | | | fall under the purview of the state licensing |
| What's a DBA? "DBA" stands for "doing | | | | board. Each state has an agency that deals |
| business as." A DBA is another name that you | | | | with these types of businesses. Contact your |
| use in the operation of your business other | | | | local government offices to see if your |
| than the legal name. For example, "Jones, | | | | particular business requires a state license. |
| Inc." might be the legal corporate name of | | | | |
| your business, but you might use "Bob Jones | | | | Some businesses will even require federal |
| Landscaping" as the everyday business name. | | | | licensing. Examples of such businesses would |
| In this case, you would see the business | | | | be those that provide investment advice or |
| described in legal context as "Jones, Inc. | | | | that deal with firearms. Federal licensing is |
| Doing Business As Bob Jones Landscaping." | | | | typically required for businesses that are |
| | | | highly regulated by the government. |
| Here's an example of using a DBA to launch a | | | | |
| new venture within an existing business. A | | | | I operate my business out of my home. Do I |
| reader asked: "My wife incorporated a | | | | still need a license? Operating a business |
| multimedia business three years ago, and I am | | | | out of your home does not get you off the |
| starting a voice-over business. Is it more | | | | hook when it comes to licensing. You should |
| beneficial for me to open as a sole | | | | check local zoning requirements and property |
| proprietorship or to operate within her | | | | covenants. You can find this information at |
| multimedia business?" | | | | the court house or by calling your local |
| | | | license department. Home businesses are also |
| My answer was that he should open his company | | | | subject to zoning laws that regulate how |
| as a division of his wife's business, | | | | property can be used and may restrict various |
| operating as a DBA. Even though he is using | | | | activities. |
| his own business name (the DBA), technically | | | | |
| his wife's corporation is launching the | | | | This is just a sampling of the legal issues |
| service and therefore will give him some | | | | that must be addressed by every new business |
| liability protection. Doing so would also | | | | owner. To learn more, take your favorite |
| help him save on start-up costs (such as | | | | lawyer to lunch. |
| having to pay for a separate incorporation). | | | | |
| It's relatively simple to keep a separate set | | | | Just be prepared to pick up the tab. |
| of books, and when the new business takes | | | | |
| off, he can spin it off into a separate | | | | Here's to your success. |