If you are interested in opening a business, you want it to last. Therefore, you should avoid the strategies of some who set up a business as quickly as possible, but forget to legally protect themselves and their companies. Passion and inspiration can only take you so far, so these are tips to help you adopt the right corporate structure.
Choose a Strategic Name
Your business name does more than describe your company or product. You want a moniker that attracts customers, but you may also need to secure financing. However, many finance companies look at different business types negatively and others positively. For example, real estate companies may be seen as too risky, while management companies are less volatile. Find out what types of businesses are looked upon favorably by financiers.
Start a Separate Entity
You may be thinking about starting a sole proprietorship. This organizational structure is simple to open and helps you increase your personal income, but it may not protect your personal assets and could increase your taxes. . If you want to start a business, consider starting an operating entity. Consider starting an LLC or corporation that is completely separate.
Keep Your Property Separate
Not only should your personal property and assets be separated from your businesses, but your intellectual property should be separated. You don’t want to attempt to sell your company and lose these assets as well. These assets include your website and phone number. Move your intellectual property into a trust that is separate from your company and its trust.
Your operating entity should be held in trust. This strategy creates distance between you and your business and the risks of running a company. This way, if you are ever sued in the future, your assets should not be taken. Although they may cost you a few thousand dollars to start, your separate trusts can pay for themselves if you ever face legal challenges.
Start a Self-Directed 401(k)
Small businesses don’t always have access to traditional retirement accounts, but you can start a self-directed or solo 401(k). As a business owner, you may need a large tax deduction, and you need to have control over your retirement. The $50,000 per year that you can save in these accounts will help you prepare for the future. In addition, your account cannot be touched during bankruptcies or lawsuits. Even the IRS cannot take your retirement money, making this a very secure account.
You are probably both excited and anxious about starting your company, but choosing the right corporate structure can provide your company with a strong foundation.