Where Do I Begin With My Entity Set-Up?
If you do not have any experience with business structures, this may be one of the more intimidating boxes to check off on your start-up checklist. A common mistake by new business owners is the thought that there is one way to organize your business. Following are a few of the most commonly used:
The decision on how you should structure your business is shaped by a number of considerations:
How the Owner will be Paid
Number of Partners
The decision on what legal structure you should employ begins with tax impact and cash flow which should lead you to a qualified CPA. We say ‘qualified’ because we recommend you work with a CPA who understands your needs and your business set-up, your cash flow, your state tax laws and your goals. There is more than one way to organize and we recommend that you make sure you don’t make a critical mistake that will cost you money or hamstring your operations. Steering you to an entity is not a function for amateurs.
Once your tax professional has weighed in and you have direction as to the structure that works for you, that is the time to meet with a business attorney. It doesn’t take an SEC attorney to set up your business organization. This is a job for a competent attorney experienced with setting business structures, creating Operating Agreements and Buy/Sell Agreements (we can touch on all of this later).
How do you file? Once the entity has been selected, your attorney or possibly your CPA will file with your state to obtain your EIN. WARNING: If your start-up needs to remain confidential, then you should delay this step to as close to business launch as possible as this is public information and your plans could get exposed. At which point we would discuss with you directly the best way to handle this process for your unique situation.