Legal Expert, Nellie Akalp, Answers Your Top Nine Legal Questions
Today, we talk to Nellie Akalp who is the owner and co-founder of CorpNet.
If you have decided to become a freelancer or own a small business, you soon start to notice that you have many legal questions that start coming up.
If you are anything like me – you too- are overwhelmed by legal questions and you really don’t know where to start or how to find the best answer. You can, of course, seek legal advice using different avenues such as online sources or hire a legal expert.
So, to save you some time, I wanted to seek some legal advice for some of the basic questions you may have as you are starting or running your business.
I turned to Nellie Akalp of CorpNet, because I consider her a legal expert when it comes to starting a small business and she is a mother of four, so she understands what it takes to run a business and raise a family.
Nellie was very generous with her time in answering these questions so you can set yourself up for success.
There are four common questions on every new entrepreneurs mind
The most common starting question is “What’s the best business structure for me? Should I form an LLC or an S Corporation?” If anyone is wondering the same question for their business, I’d direct them to our Business Structure Wizard. You answer a few basic questions about your business and plans, and the wizard will make recommendations for you.
The next two common questions are where and when. As for where… states like Delaware, Nevada, and Wyoming are very popular places for incorporation.
However, I typically advise small businesses that if they have less than five shareholders, they should incorporate wherever they live or wherever their business is located. That’s because there are added fees and paperwork associated with incorporating and operating in different states – and it’s just not worth it for most small businesses.
The next question is when, and here’s what I recommend.
If you’re particularly concerned about liability and protecting your personal assets, then by all means, you should incorporate your business as soon as possible.
However, if you’re not too worried about liability, then the simplest time (at least tax-wise and paperwork-wise) is to form your LLC or incorporate at the beginning of the year – that way your business is the same structure for the entire year. At CorpNet, we offer customers a ‘delayed filing’ service. This way they can get their paperwork in to us at any time that’s convenient to them and we’ll process it right at the beginning of the year.
Top Costly and Time Consuming Legal Mistakes
Probably one of the biggest mistakes is choosing the wrong business structure. For example, some small businesses form a C Corporation and then are shocked at tax time when they realize they’re actually being taxed twice (first the business gets taxed, and then they get taxed as an individual). If this is an issue, then an LLC or S Corporation is a better choice.
Another costly mistake could be going to a lawyer. While lawyers are instrumental to the incorporation process, new entrepreneurs will often spend a lot of money hiring a lawyer to complete paperwork they could easily complete themselves.
At CorpNet, we provide a lot of resources to help small business owners understand the key differences between the major business structures. Business owners may also utilize an accountant or tax advisor to find out what structure would be best. Then, once you settle on the business structure, you don’t need to hire a lawyer to do the incorporation. You can do it through CorpNet or another online legal filing service. That will save you significant dollars.
What’s In A Name?
Everything starts with your business name – it’s the first impression you make with customers.
When it comes to legal concerns and your name, there are three things:
- First, you need to make sure that you’re legally using your business name. That means you can’t use a name that someone else is already using or owns the trademark; we offer a free trademark search where you can find out if someone already has a trademark for any given business name. We also offer a free business name search so you can determine if the name is being used within the state you are planning to conduct your business within.
- Once you have gone through the name search clearance process, you must register your business name with the state. This is done automatically when you form an LLC or corporation with the state; but if you’re not ready to create an official structure yet, you can always get a DBA (Doing Business As) to legally register your business name with the state.
- Lastly, if you’re concerned about protecting your business name in all 50 states (i.e. making sure that no one else can use your name), then you should file for a trademark for the name.
Three Ways to Proactively Protect Yourself and Your Business
The first thing is to form some kind of legal entity for your business in order to put some space between you and your business. That way if something should happen to your business (like it gets sued or it can pay its bills), your own personal finances will be protected.
Next, if you are concerned about protecting your brand, then you should trademark your company name, product name, etc. This act will make it easier to take legal action in the event that someone starts using your business name (or another name that’s too close for comfort).
And the last thing is to make sure your business stays compliant…that means keeping up with your state and federal taxes, as well as with any annual filings and fees due to the state. If you don’t keep up to date with these things, your business will fall out of good standing and you can be personally liable for your business.
Be Proactive About Business Growth
If you’re experiencing steady growth, congratulations- you’re clearly doing something right and should keep it up!
From a legal perspective, you should make sure that you’ve crossed all the T’s and dotted all the I’s. Have you formed a legal entity (LLC or corporation) for your company? Do you have all your sales and local permits in order? And this might also be a good time to apply for a trademark- particularly because you want to make sure you’re protecting an important brand.
In addition, if you’re expanding your business into other states, you need to make sure that you’re doing this in a legal way. That usually means applying for a “foreign qualification” in the new states. It’s very simple paperwork, and will make sure you have the right legal protection wherever you’re doing business.
Evaluate your business structure and other legal aspects of your business regularly
I’d say the main time(s) when you should re-evaluate your business structure is when your situation changes…for example, your income/revenue changes significantly, you want to take your company public, or your accountant advises you to make a change. Otherwise, most small business owners won’t need to make any changes to their business structure.
How can CorpNet help small business owners?
At CorpNet, we try to provide as many resources as possible to help small businesses start and maintain their businesses. Our mission is to provide new and existing business owners with the most comprehensive cost effective services when it comes to starting, protecting and managing their business. We’re creating as many free guides and tools as we can to help people understand the steps needed to start a business (i.e. how to choose between incorporating a business or forming an LLC, or how to get a trademark).
We also help small business owners take the guesswork out of various legal filings. Our service costs a fraction of what an attorney would bill to file the paperwork, and by choosing a service like CorpNet, you know that your paperwork will be done correctly so there won’t be any hiccups or problems with your application.
Some of the state specifications can be very picky, and most small business owners would rather spend their time running their business than trying to learn all the nuances of state laws. Since we’re not your personal attorney or accountant, we can’t give out specific advice, but our specialists are extremely knowledgeable and love talking to small business owners.
People are often surprised at just how helpful our telephone support can be.
Note: I am not an affiliate of CorpNet and get no compensation for publishing this article.
Image courtesy of Stuart Miles / FreeDigitalPhotos.net