Birmingham, AL Business Formation Attorneys
Starting a business is an exciting undertaking, but one that isn’t without challenges and complications. At the BHM Law Group, our experienced Birmingham business formation lawyers provide legal counsel to owners of businesses large and small throughout Birmingham and the surrounding areas.
If you are in the early stages of forming a business and want to protect your interests throughout the process, working with an experienced business lawyer is strongly recommended. To learn more about our business formation legal services and how we can help you and your business thrive, contact our law firm today.
Steps to Forming a Business
While many would-be businesses owners have creative minds and great ideas, too often, business formation ends there. Forming a successful business is a complex creative, financial, and legal process. Some basic steps to forming a business include:
- Choosing a business name. This is one of the most important—and most exciting—parts of starting a business. Once a name is selected, it should be cross-checked to avoid any copyright issues. If all is clear, the business name can be registered.
- Choosing a business structure. When forming a business, a business owner or owners will need to choose between various business structures, including sole proprietorship, general partnership, corporation, and more. Read more about business structures below.
- Determining business tax status. When choosing the entity type for your business, you’ll also consider how you want your business to be taxed. The business structure you select will determine your personal tax liability for your business’s operations, as well as impact your tax status.
- Defining the business’s mission. Sometimes, a mission and purpose are determined early on in the process—even before a business name is selected. Defining these things can impact other parts of the business formation process, including workplace policies, employee contracts, etc.
- Creating an ownership agreement. If you are the sole owner of a newly formed business, then creating an ownership agreement won’t be as necessary. However, if there are multiple owners, then an ownership agreement is essential. This type of agreement spells out who makes decisions, how profits and losses will be shared, and how disputes will be dealt with.
- Registering your business. After deciding on a business structure, name, and ownership agreement, it’s time to register your business with the Secretary of State. Registering your business is one of the primary services provided by a business formation attorney.
- Setting up bank accounts, tax IDs, and other financials. Working with a financial professional to establish and manage bank accounts, tax IDs, and other financial accounts and information is strongly recommended.
- Acquiring any necessary operating licenses and permits. Depending on your business type, you may be required to obtain licenses or permits prior to operation. Be sure to consult with your attorney about this to ensure you are in compliance with any laws and regulations.
- Pursuing intellectual property protections (if applicable). Your business may choose to pursue intellectual property protections, such as a patent. This is another area of business formation and operations that an attorney can assist with.
- Entering into contracts, hiring employees, creating policies, etc. Once your business has been formed, the real work begins—hiring employees, creating handbooks and policies, setting up relationships with other companies or suppliers, and entering into contracts.
Choosing a Business Structure
One of the most valuable services provided by the BHM Law Group is that of helping new businesses choose a business structure. Different business structures include:
- Sole Proprietorship. In a sole proprietorship, one person is the sole owner and operator of the business, and the owner’s personal finances are tied to that of the business. As such, the business owner will file one tax form—1040 U.S. Individual Income Tax Form and will be responsible for paying self-employment tax.
- In a partnership, there are two or more owners of the business. Similar to a sole proprietorship, profits or losses are passed through to partners, who will report these on their individual income tax forms.
- Unlike the two structures listed above, a corporation is considered a separate entity for tax-filing purposes. Profits from the corporation are distributed to shareholders.
- S Corporation. S corporations are unique in that they elect to have profits and losses pass through to shareholders, mitigating the risk of double taxation.
- Limited Liability Company (LLC). In an LLC, the owners of the LLC are called members, and those members may be individuals, but they may also be businesses, corporations, or other entities. How an LLC is taxed depends on the number of members and certain elections made by the LLC.
Business Formation Services Provided by the BHM Law Group
When you choose to work with the BHM Law Group, our experienced business formation lawyer can assist you through all stages of your business formation journey. Critical legal services that we provide include:
- Helping you to choose the right business structure for your business type and projected income as well as ownership structure
- Assisting in registering your business with the Secretary of State
- Acquiring operating licenses and permits
- Helping clients understand the laws and limitations around certain operations
- Entering into contracts
- Navigating labor laws
- Resolving business disputes
The Advantages of Working with a Business Formation Lawyer
While there is no requirement to have legal representation when forming a business, doing so is a surefire way to protect your interests and avoid legal snafus. Forming a business is a complex process, and a misstep could land you in hot water.
Making a business formation error could lead to copyright disputes, filing and processing delays, and other expenses that could have been mitigated. When you work with a business formation lawyer, the lawyer will have your best interests in mind.
To learn more about our business formation services for new business owners in the Birmingham area, please reach out to our law firm by phone at (205) 994-0902. You can also send us a message directly using the intake form on our website and someone in our office will follow up with you shortly.