By Isabella Erickson
If you are looking to start your own business, you may be wondering where to begin. Technically, it is easy to start a business. You can submit a form to the Secretary of State and, once approved, your business will be officially active. No lawyer needed.
Although it is technically that easy, there are more factors to consider than just formation. Companies are separate legal “people.” Even if you are the only owner of your company, you are not your company. Maintaining this divide protects your limited liability status. Part of maintaining this divide is keeping a corporate book.
When an attorney helps you form a business, they will draft certain documents for you, including organizational minutes and rules of the company called bylaws (if a corporation) or an operating agreement (if a limited liability company). Organizational minutes show that the company and its owner approve of the formation of the company and any initial items, like who may be the manager or board or where the company will open a bank account. The bylaws or operating agreement is the company’s governing document, like a business constitution.
If you are in business with other people, an operating agreement or bylaws is essential. It will lay out how the company is run, how certain important decisions are made, and how distributions may be made, in addition to any other provisions you and your partners may wish to add. The operating agreement or bylaws are a contract between the owners and the companies about how the owners will run the company. Additionally, banks will typically ask for a copy of the bylaws or operating agreement when working with companies. If you end up in a dispute with your partners, then the operating agreement will act as a baseline for how the dispute should be handled. A Buy-Sell Agreement can further provide strong protections for the owners.
Organizational documents can be complicated. You may wish to add unique provisions protecting your company from outside investors or limiting what the managers of your company may do. If your company practices a profession, like medicine, your organizational documents will need to comply with professional ethics and laws regarding professional organizations. Additionally, if the Corporate Transparency Act proceeds, the owners must ensure to comply with its filing requirements.
In short, you can start a business without the help of an attorney, but an attorney can provide valuable advice regarding the legal formalities of owning a business, as well as draft organizational documents that suit your business goals. If you are looking to start your own business, contact the experienced attorneys at Gehling Osborn Law Firm, PLC.
Comments