SIMPLE TIP NUMBER THREE:

COMPANY FORMATION

Before you put on your work belt;   please, please first walk through the below understandings.

 

First,   Define who do you want to be.   Do you just want to be ME   transacting business?  This is fine and legally we call this a sole proprietor.    Do you want to be “ME and my spouse” (I know, improper grammar.) This can be acceptable if you correctly structure this “who” question.

 

Other options naturally include establishing “legal fictions” such as limited liability companies, corporations, or limited liability partnerships. There are others.  (Please, in business affairs, do not ever become a “partner” unless all your advisors so recommend). These “legal fictions” are created to help provide taxing alternatives and partial personal liability shields.  However to obtain these potential benefits, you must conduct your affairs as the law requires.  Simply filing the Certificate of Authority or Articles of Incorporation is not nearly enough.

 

Careful consideration to which of “who am I” must occur at least between your lawyer, accountant, and, if you accept the wise words from E-Myth author, Michael E. Gerber, your family.

 

Second, once you define “who I am” as you transact your business affairs, you must remember “who I am” every day in every way.  I term this, always knowing which hat you are wearing when you transact business.

 

Are you corporate man/woman?  Are you limited liability man/woman?    Who does the magnetic sticker on the side of your pick up say you are?  Who does your business card say you are?  Who does your letterhead say you are?   How do you introduce yourself?  Who are you when you answer the phone?  Who are you when you make a bid or enter into an agreement verbal or written?

 

To help keep your liability limited, remain consistent in how you present yourself, depending on the name you assign to your legal fiction.

 

NEXT TIME, Protecting your company’s intellectual property.