State Compliant Business Formation & Business Organization
Nobody goes into business thinking: “What I really want is a business where I’m not sure if I’m compliant with State law, where owner interests and responsibilities aren’t defined, and where I’m exposed to the full range of personal liability”. Yet when confronted with business formation and business organization, many business owners simply fly by the seat of their pants.
The business owner has no idea if they chose the right business structure
The business owner has no idea if the State documents were properly filed
There is no Operating Agreement or it is poorly written
The business owner is not sure if they have the correct licensing
The business owner is not sure if they are collecting and remitting taxes properly
The business owner is not sure if they can legally conduct business
MOST WORRISOME, THERE IS NO CERTAINTY ABOUT TOMORROW!
Healthy Businesses Start Right
With business it is just like people: it is easier to stay healthy than to get healthy. Once you have issues with the State, they can issue fines, levy or lock bank accounts, file liens against or confiscate business property, add penalties and interest, or simply show up and close down your business. All of this becomes so expensive and burdensome to fight and then fix it often kills the business. That is why it is so important to hire a business attorney who can get your business started on the right track from the beginning.
STEP ONE is deciding which form of business structure to use. When deciding whether to recommend a sole proprietorship, a partnership, a limited liability partnership, a limited liability company, a corporation or a non-for-profit, our business attorneys:
- Review the industry to establish industry standards and State regulations
- Review the ownership structure
- Perform an intellectual property search to check for potential infringement
- Consider your potential exposure to civil liability
- Consider exposure to tax liability
- Review your business model for projected future needs of the business organization
- Focus on your personal business style and goals
We then draft and file the proper State documents and any ancillary documents or agreements (minutes, resolutions, authorizations, etc.) the State may require to actual create the business entity.
STEP TWO is outlining, drafting and signing a Partnership Agreement (for partnerships), an Operating Agreement (for LLC’s and smaller corporations) or Corporate Bylaws (for larger corporations). One of the most important business organization tasks to business health is creating an agreement of understanding between the partners, members or shareholders about who owns what percentage, who has which powers, who has which responsibilities, and how everybody will be compensated. Read More on the Importance of Agreements Between Business Founders.
The business operating agreement usually covers issues such as (but not limited to):
- who the officers are
- what happens if an owner wants out
- what happens if an owner becomes sick, disabled, or passes away
- owner contributions to the business
- owner liability to one another
- how employees will be handled
- intellectual property
- business dissolution
STEP THREE is getting the business organization properly licensed. Once our business attorneys are aware of your business model and purpose, we can review Connecticut law to identify which licenses the business, or individuals such as owners or employees, need to possess. We then identify and compile the paperwork or proof necessary to get the right licenses issued by the State. Many licenses also require continued education, special insurance or bonding, and other license specific requirements of which we make our business clients aware.
STEP FOUR is identifying if your business needs to collect certain taxes and remit payment to the State. Sales & Use Tax, Occupancy Tax, Admission & Dues Tax, and Employment Tax are just some of the tax types we review for our clients. Once the taxes are identified, your accountant can get you the proper TAX ID’s.
How It All Comes Together
Once your business entity is formed with the State and you have a fully executed operating agreement, you can go ahead an open a bank account. You will need to contact your accountant to get your State and Federal Tax ID’s. Once your licensing comes through, you are open to conduct business within the State of Connecticut.