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Town Topics, March 30, 2005 Legal Forum:
"Thinking of Starting Your Own Business?"
by Raymond M. Kang, Esq.

Reprinted with permision of the Town Topics.

If you are thinking of starting your own business, then by now you have already developed a product or service that you want to sell, and you have sketched out a business and marketing plan that will help you achieve success. The only thing remaining is to implement those ideas, and start selling those products and services, right? Hold on. Before you start doing anything, there are a few other things you should consider.

When starting a new business you must decide on the type of structure under which you will operate your business. This may be one of the most important business decisions you will make. The basic organizational structures available to entrepreneurs in New Jersey are sole proprietorships, partnerships, corporations, and limited liability companies. The type of business structure you choose will depend on many factors, including the nature of the business operations, legal restrictions, capital needs, tax advantages, number of owners, planned life of the business, and whether you need to protect personal assets from business creditors.

After deciding upon the structure of the business, the next thing to do is make sure that all necessary and appropriate applications and registrations with the State of New Jersey and the Internal Revenue Service for tax and employer purposes are made. Depending on the type of entity you have formed, certain applications and registrations must be completed within a specific time frame, so be sure that you are aware of the legal requirements imposed upon the business.

If you are starting the new business with someone else — even if it’s a friend or family member– it is critical that a written document detailing the terms and conditions of the business relationship be prepared. For example, in the case of a limited liability company, the “operating agreement” of the limited liability company will state who the owners of the company are and what rights, duties and obligations each member has with respect to the daily operations of the business. The “operating agreement” may also have specific provisions setting forth the guidelines and limitations on transferring or selling a member’s ownership interest in the limited liability company. Without a document such as an “operating agreement” in place at the outset of the business, the potential for a dispute between the partners ending in litigation is great, and the result can be devastating.

Another thing to consider when starting a new business is registering its name, logo or internet domain name with the United States Patent and Trademark Office. A company’s name, logo or domain name is one of its most important assets. In fact, there are many businesses that profit solely from the use of other companies’ names. By registering the company’s name, logo or domain name with the United States Patent and Trademark Office, the company is afforded nationwide protection against infringement, and the registration adds value to the company.

Though challenging, starting your own business can be an exciting experience. With the right planning, proper setup, and adequate protections in place, you will have the tools to overcome many of those challenges and place yourself in position for success.