How to Start a Business in Virginia
Starting a business can be a very involved process. As a new business owner you have lots of decisions to make. Whether you have experience in business management or not, you will want to understand how to best protect your business legally, financially, and minimize the probability of failure.
In Virginia, starting a business is a rather simple process in terms of paperwork, but hiring an experienced business attorney can help you develop a sound business plan, protect your business model from competition or unforeseen legal violations, and establish a management structure that will take the guesswork out of operating a business. Below are a few questions you will want to consider as you plan a new business venture. We have helped many businesses succeed and look forward to adding yours to our list!
- Who’s In? The most important of all business decisions is who will be involved as an owner of the business. If you don’t choose your business partners wisely, you are doomed to later problems that cannot be easily, or cheaply, resolved. Make sure you have an iron clad investment agreement in place, that lays out the financial contributions, material contributions, roles of each shareholder, and how to resolve disputes in management. Also, make sure that the business has legal title to the key licensing rights to products, software, and original designs or proprietary goods and services that will be the cornerstone of your business model.
- What have I created for my business that needs to be protected? When you start a business that involves trade secrets, new product designs or processes, you need to think about how to protect these novel ideas from your competitors. Do this by setting up proper patents and trademarks, or develop a plan for how to preserve your trade secrets during the business set up process. You need protection from employees eager to steal new ideas, as well as the outside market and competitors. If you’re going into business with another person or multiple people it will be in your best interest to include in your operating agreement that your intellectual property remains your property, subject to a limited license in favor of the business on measurable bench marks for continued rights to the license. That way, you can take back the valuable rights if the business does not meet the benchmarks for delivery to market. Keeping your ownership rights to your property secure will avoid any confusion about ownership in the event a question arises later.
- What documents do I need to be more appealing to an investor? Investors like to see a well written business plan. Thoroughly prepared financial projections, carefully detailed income and expense statements, market analysis, competitive analysis, and growth projections plans are key to attracting new capital for your venture. In addition they will also like to see that your business has an operating agreement controlling investor relations and decision making procedures, appropriate licensing and patents on key products and processes, and key personnel employment agreements with full confidentiality and loyalty clauses to protect the business from its key employees, as well as the same between all partners and investors in the business. Most of all, what do the number say about your profitability and future market expansion capabilities? If there is no “new level” to get to with fresh investment capital, the new investors will have no incentive to get involved.
- What contractual agreements will I need to enter? This will vary depending on your business. Your business is unique and so the contractual agreements will be tailored to your needs. Typical agreements might be for leasing a storefront, negotiating an e-commerce website development project, sale of goods or service contracts, Vendor supply agreements, and an array of other potential contracts. Any transaction between your business and another party should always be in writing protecting the best interest of the business.
- Does my product or service need any type of warranty or warning labels? Warranties offer security to consumers and many people buy products because of the warranties offered. Limiting the scope of your warranties with terms and conditions can help protect your business from having to pay for repairs down the road.
- How do I want my business to be taxed? You need to figure out what type of business entity you want to create. Businesses can now be taxed as though it’s personal income or it can be taxed as a corporation. Learning the tax benefits and making a fully informed decision could save you thousands.
Starting a business can take more time than meets the eye. If you rush through the startup phase and fail to think critically about your near term and long term needs, your business could be at risk. So many business owners end up stressed, clueless, or bankrupt because they failed to consider the tough questions up front. At the Strong Law Firm, we have a great deal of experience in helping you equip your business with the documents that are necessary to protect, promote and position your business for success. Give us a call today so we can begin helping you answer these types of questions.