The Problem with DIY Business Structuring:
Do you have all the required licenses? Do you have all of the appropriate documents and meetings for your Corporation or Limited Liability Company? Most new businesses believe that once their registration is approved by the Secretary of State, they’re properly structured. The business owner may have filled out all the required forms, or perhaps registered through an online website by clicking on a series of check boxes the elements that best described their business. They hit the submit button and automatically submitted their quick business registration. Mission accomplished? Nothing could be further from the truth.
If your business is improperly structured, all your personal assets could be at risk in a lawsuit. For example, if you have a business partner, and the two of you felt that a handshake was sufficient agreement in the first flush of enthusiasm, you may be setting yourselves up for a lot of pain and suffering on down the line. How will decisions be made when there is a disagreement? What if one partner decides to sell their portion of the business to a competitor? What if there are disagreements about hiring, or purchasing assets? What if a partner goes through a divorce and the ex demands half? What if a partner dies and the spouse decides to liquidate?
Improper legal structure can lead to these, and other nightmare scenarios, even though the business structure has been approved by the State. In fact, the mere thought that your business may not be properly structured, and you are left open to future unanticipated risk and damage can lead to sleepless nights. You’re left with that nagging feeling, “Did I get everything or did I miss an important document?”
For example, we have a client who formed their business structure through an online filing company. The company had them register their business and then created a corporate book. When the client came to us and we reviewed their book we found that it was not in compliance with the legal guidelines for their type of corporation. Their corporate book did not come with an instruction manual, which brings up another issue: Once a business is formed, that is not the end of the story. Business structure is not a “set and forget” project. There is regular review, update and maintenance as the business grows and evolves, laws change, there may be important changes in the personal lives of the owners that could require a review of the business structure.
Solution: Proper Business Structuring Guided by Experts
- Enlist the personal attention of an experienced, professional business structuring company to help guide you through the structuring process to the best conclusion.
- This company will connect you with a proven corporate attorney who will work closely with you to prepare your required documents.
- In addition, you will have established a trusted relationship with these experts who are available into the future to review your business structure at regular intervals and when changes in your business, personal life or legal requirements dictate an update.
Benefits of Proper Business Structuring Guided by Experts:
- Peace of mind
- Elimination of guesswork
- No frustration or stress during the structuring process
- You’re prepared for the unexpected
- Your business structuring company may refer trusted professionals to you for many of your business needs (attorneys, payroll companies, bankers, marketing companies…etc.)
- Your business structure smoothly adjusts to changes in your business and personal life over the years
- Your personal assets are protected
- Your business is set up to become an asset you can one day sell
Action Thought Starters:
- What 2 structure elements is your business missing?
- What single structure element most needs to be revisited?
- Where are all your required business structure documents?
- Who is the corporate attorney on retainer to review your business structure documents before signing?