The Commercially Savvy Lawyer (TM): National Small Business Week

This week is National Small Business Week so it is apropos to speak to some of the legal considerations you have to factor into building your business, whether you are a brand new post-Great Resignation entrepreneur or an established small business owner.

If you are a new entrepreneur just starting out - whether your selling your own crafts or starting a venture capital fund, you need a lawyer to set the business up and keep your business healthy once you've opened your doors.

Company Formation: The kind of company you form will be informed by tax exposure and limitations on liability. Since many entrepreneurs want to save formation costs, many entrepreneurs will opt to do this part themselves.

A high-level review of the commercial corporate formation options are below and require further exploration, either by going on a corporate filing website of which there are many or speaking to a lawyer:

• sole proprietorship - for lawyers, there are no formalities included in hanging up your shingle per se. However, for non-lawyers, you can establish a brand by forming a DBA ("Doing Business As");
• Limited Liability Corporations (LLCs) - provides flexibility, protection from personal debts and liabilities, pass-through taxation, flexible tax status and minimal formalities;
• S-Corp - common structure for small businesses that has a special tax status with the IRS (they file federal taxes but don't pay income tax at a corporate level), profits and losses pass through the business to the owner's personal tax returns so taxes are paid at a personal (not corporate) rate, the owner has personal asset protection, the ability to raise capital and can sell shares on a limited basis; and,
• C-Corp - can go public, sell an unlimited number of shares, offers personal asset protection, enables raising capital, and higher earning potential;

The form you choose for your business will inform your tax and general and personal liability so choose carefully. Hiring a tax-lawyer can help you determine the best set-up for your enterprise, especially if you plan to operate across borders;

Licenses: Depending on the type of business you are opening, you will need to figure out if you need a license or not. You can usually do this via the local government website but it can get more complicated in which case you could outsource the work to an attorney;

Rent and lease terms: if you're opening a brick and mortar, this will also include considerations like insurance, zoning (can you actually do your business in the property legally?), what are the lease terms?, can you terminate if things don't go well?, will you hire a broker to source a property?, and, costs;

Contracts: There is no way you can set up a business or continue to run a business without signing contracts. The kinds of contracts new or established entrepreneurs will likely sign may include the following (this list is not exhaustive):

• If you're opening a brick & mortar, you'll have a lease with the landlord;
• If you're hiring employees, you'll have employment/consultancy contracts;
• If you hire a lawyer/s, you'll sign letters of engagement for the work they do for you and your enterprise;
• If you're offering employees benefits, you'll have contracts with the benefits providers (i.e., insurance); and,
• Contracts with vendors and suppliers (these can sometimes just be purchase orders depending on what industry you are in);

Policies: Businesses aside from sole proprietorships may hire employees, in which case you need to have internal policies like sexual harassment, anti-bribery and anti-corruption policies, policies guided by statute (i.e., medical leave.) You may also have customer-facing policies (i.e., refund policy, data protection/privacy policies, etc.)

Policies often need to be updated and refreshed to reflect any changes in the law since your last iteration - so it is important to bear this in mind as one of the things that will need to be audited on a regular basis;

Website Stuff: It is getting increasingly easy to put up a website but you are not exempt from putting up terms and conditions and data protection/privacy policies up;

Trademarks: If you want to legally protect your trademark (goods) or service mark (services), you can do this yourself on the USPTO website if your application is straightforward, but if it gets complicated (like third parties challenge your application), you will need to hire a trademark attorney. Trademark registration can be expensive so be sure to get it right before you make this investment. Also, it will not stop people copying you so be prepared to litigate if your trademark/service mark is infringed;

Corporate Bank Account: Once you've incorporated your company, you can take your paperwork to a bank of your choice and set up a corporate bank account that will best suit your business needs;

Marketing/Business Plan: Every business owner needs a plan to map out progression otherwise it can be very overwhelming and important steps might get forgotten in the overwhelm. It can be simple or complex, whatever works for you, but you should have one;

Pitch Deck: Depending on the kind of business you are in, you may use a pitch deck to find business. A pitch deck is basically a short presentation summarizing your services or one particular service. Experts currently say the optimum length is 12 pages.

The lure of being your own boss can be very tempting. That said, it requires a complete mindset shift because your income now completely rests on you and your efforts and can be positively or negatively impacted by geopolitics, economics, pandemics, etc.

As a New York attorney, I am qualified to assist prospective or established business owners with their commercial needs. As a lawyer who has spent 15 years in the Middle East, I can guide you should you wish to launch/expand into the Middle East, specifically the Gulf Countries in the Arabian Gulf (a/k/a Persian Gulf), I am happy to assist you with your commercial endeavours, domestic and/or international.

Attorney advertising.