Business Formation
What is the best business structure for my startup?
It depends on your goals. A sole proprietorship is simple, LLC offers liability protection, and corporations attract investors.
How do I form a corporation?
File articles of incorporation with the state, create bylaws, appoint directors, and issue stock.
What is the difference between an LLC and a corporation?
LLCs offer flexibility and pass-through taxation, while corporations provide scalability, easier access to funding, and potential tax benefits.
Do I need a lawyer to incorporate my business?
Also read:
- https://prolegalinsights.com/30-must-know-corporate-law-answers-for-business-owners/
- https://prolegalinsights.com/40-corporate-law-faqs-for-startups-and-corporations/
- https://prolegalinsights.com/20-common-corporate-law-questions-and-their-solutions/
While not mandatory, a lawyer ensures compliance and drafts tailored documents like bylaws or shareholder agreements.
What are corporate bylaws?
Internal rules governing how your corporation operates, including decision-making and dispute resolution.
Corporate Compliance
What is a registered agent, and do I need one?
A registered agent receives legal and tax documents on behalf of the business; it is legally required in most states.
What are annual reports, and why are they necessary?
Annual reports provide updated business information to the state and maintain your corporation’s good standing.
What happens if I fail to comply with corporate laws?
Noncompliance can result in fines, loss of good standing, or even dissolution of the corporation.
Do I have to hold regular board meetings?
Yes, corporations are mandated to hold board meetings to ensure proper governance and document decisions.
How do I keep my personal and business finances separate?
Maintain separate bank accounts, avoid personal use of business funds, and document transactions properly.
Corporate Financing
How can my corporation raise capital?
Issue stocks, secure loans, attract venture capital, or consider crowdfunding.
What is the difference between common and preferred stock?
Common stock provides voting rights and profit sharing, while preferred stock offers fixed dividends and priority in liquidation.
Do I have to issue stock certificates?
While not always necessary, issuing stock certificates provides tangible proof of ownership and legal clarity.
What is equity financing?
Raising funds by selling shares of your company to investors in exchange for ownership stakes.
What are the risks of taking on investors?
You may lose control over some decisions, be pressured to deliver returns, and dilute ownership.
Contracts and Agreements
What is a shareholder agreement?
A contract that defines the rights, responsibilities, and protections of shareholders, including voting, disputes, and share transfers.
Do I need a lawyer for business contracts?
Yes, to ensure clarity, compliance, and protection against potential disputes.
What happens if a business contract is breached?
Legal remedies include monetary damages, specific performance, or termination of the agreement.
What is intellectual property (IP), and how do I protect it?
IP includes patents, trademarks, copyrights, and trade secrets. Protect it through registration, contracts, and NDAs.
Can my business be sued?
Yes, as a legal entity, your corporation can face lawsuits. Proper compliance and liability insurance can mitigate risks.
Business Operations
Do I need a business license?
Most businesses require licenses or permits, based on your location and industry.
What is piercing the corporate veil?
When courts decide to hold owners personally liable for corporate debts if they misuse the business entity, such as mixing personal and business finances.
What is a board of directors?
To oversee the corporation’s policies, major decisions and its compliance with legal obligations.
Do I need to operate my business in other states?
Yes, but you may have to register as a foreign entity and comply with local regulations.
What if I want to dissolve my corporation?
File articles of dissolution, pay off debts, distribute any remaining assets, and notify relevant authorities.
These questions address important areas of corporate law for entrepreneurs, guiding you through formation, compliance, financing, and operations.