Factors to Consider in Forming a New Company – Part 2

Hopefully you have read our previous blog titled “Factors to Consider in Forming a New Company – Part 1” for some of the first items you should consider when forming a new company. Below are a few other considerations:

• Hire wisely . It is smart to be picky when hiring new employees. Poor hiring decisions can derail the carefully laid plans for your new business. You should always consider any continuing obligations your new employee may have to a former employer, such as a non-compete agreement. Additionally, it can be difficult to fire a bad hire, so you are better off making good decisions from the start.
• Develop written policies . Your business should not only be smart in hiring employees, but you must also protect your proprietary information by developing appropriate employment policies and procedures. This includes ensuring that your business has an at-will termination policy and an effective employee handbook.
• Raising capital . Depending on the type of entity you have formed, there are differing rules governing your business’s fundraising activities. You should confer with an experienced business law attorney to ensure your compliance.
• Taxes . Your business will have certain tax liabilities, so you should retain an accountant or other tax professional from the start to help you. The last thing you want is for your new company to get into tax trouble.
• Corporate formalities . All businesses must keep their company house in order. To keep the owners personal liability at a minimum, the required business formalities must be followed. This means holding any required meetings of the shareholders, board of directors, members, partners or other officers of the entity. Your business should also maintain organized and accurate records. This includes maintaining copies of your entity’s formation documents as well as all contracts and agreements. By following the business formalities and requirements, your company will not only operate more efficiently, but it will also be prepared to respond when there are inquiries.