When I meet with individuals that want to start a company, they often ask, “What do I need?” There is a lot of conflicting information out there on the web and in online business formation websites that lead people to believe that they need a lot of documentation to get started. This simply is not true.
We want to keep your legal costs as low as possible when you are forming a company so that you can put your money into the company!
You do not need anything to start a company, just a name and an idea. What I do suggest that you have is an experienced lawyer and law firm that you can speak with to learn how to legally operate your company and avoid missteps that can put your company in jeopardy and your personal assets.
When I sit down with individuals looking to start a company, I like to hear about what their vision is and what their plans are — this is the exciting part of what I do. The only issue in front of us is how we preemptively create a company that will make it very difficult for others to sue so as to best protect my client’s assets.
Yes, you can go online and form a company but then you are left with a piece of paper with very little directions as to how to operate that company under the eyes of the law.
Fortunately, we have years of business law experience in assisting companies form their limited liability companies (LLC), their professional limited liability companies (PLLC), S. Corporation designations and other entities.
There is a right way and a wrong way to sign on behalf of the company. You must also display to the world that you are a formed company with limited liability.
Do I need a partnership agreement?
Not unless you have partners. And if we do have partners, we want to create and draft a company agreement.
I do NOT recommend buying a boilerplate company agreement online. We also assist clients in selling companies and transferring their interests (membership interests) to other individuals and entities. When we learn that they have a company agreement and they purchased one online, we are then bound by that agreement, that unfortunately, the company agreements have not ever been looked at or followed. So we have to “undo” the company agreement and governing documents or follow them in order to properly convey the company to another individual or people. You need a business law firm in Texas that can explain to you what documents you need and do not need.
Spouses and New Businesses
Does my spouse need to be on the company formation (certificate of formation) documentation as an owner?
I get this question a lot. And there are two answers.
Answer 1. If the company is formed after the marriage, then there is a very strong likelihood that the company, or the portion of the listed spouse on the company documents, is community property. Meaning, that both spouse essentially own 50% each as part of the communal estate.
Answer 2. The second answer relates to tax implications. While I am not a tax attorney or accountant, I work closely with accountants to make sure we are both on the same page. From what I have been told by experienced tax attorneys and experienced accountants, is that if we put but a married couple on the certificate of formation as both members (both joint owners) then they will need to designate themselves as a partnership, which I am told has unintended tax consequences. Meanwhile, if only one spouse is on the filing paperwork for the business, then the company — if there is only one owner — can designate itself as a sole proprietorship, which has advantageous tax implications compared to a partnership (as I am told by experienced tax planning individuals).
If you or someone you know would like more information about creating a company or has business law questions, contact an attorney at Oxner Legha Law Firm by calling 346-327-9500.