Choose a Simple Entity and Structure
Start out simple on the managerial structure side. A single member LLC or partnership (if you have a partner) can be the best way to get your business off the ground and running. Too often, individuals wanting form a business are thinking too far down the road: what classes of stock and how many shares should I issue, should I file as an S-corp, or how will I add investors when my company takes off? Let your business grow. Time you spend reading, drafting, and figuring out a complicated business structure is time you are not investing in your business. Take the time to get your business structured with a simple operating agreement drafted by your attorney and get to work on the real things that matter. Let your attorney take care of the big questions down the road.
Take the Time to Have Contracts Drafted for Business Relationships
There are a lot of scams out there. When you start a business, you will likely have working relationships with independent contractors or other service providers. If you are investing money in these relationships with the hope of earning some kind of return for your business, it is always best to get a contract for services drafted. What are the expectations? What are the metrics of “success” and who is responsible for measuring success? What happens when those metrics are not met?
“Sometimes clients will call to have me draft a contract before they enter into a relationship with another company, but are disappointed when the other party cancels the deal when they find out my client has hired an attorney to draft a contract. I try to impress on my clients that they just dodged a very serious bullet—why would a company not want to enter into a contract that made them prove they provided a valuable service and give the other party rights to recover in case they didn’t actually perform what they said they would? We take that as a win.”
Research Regulations in Your Industry
Before starting your company, you need to know the industry you are entering into backwards and forwards. Are the licenses you need to have in order to operate, or even operate in specific locations? Do you need to have your product certified by an independent or governmental agency prior to selling your product to consumers? Is your product legal to sell online or to mail to certain states if ordered online from those locations?
“I have probably talked more people out of starting businesses than in to them. When a client calls and says they want to start a business, my first questions are about what they know about the industry and what licenses they have, who they’ve talked to, and what the laws on interstate commerce are. A lot of the time, they haven’t thought this far ahead—which is fine, that’s what their attorney is for. We take the time, we break down the regulations, what licenses they’ll need, and how they can operate a successful business. Sometimes this talks them out of it, sometimes it inspires them even more to start their company, and either way, I’m here for them.”
If you are thinking of starting a small business in San Antonio, reach out to Attorney Nathaniel Gilbert at the Law Office of Nathaniel Gilbert, LLC to discuss your options, how you want your business to run, and what steps you need to take to hit the ground running. Contact Nate directly, Here.