Practice Group / Corporate

Ideally, as early as possible. A business should engage legal counsel at formation to choose the right entity structure and establish a solid foundation for growth. The relationship should continue beyond startup, with counsel providing guidance on contracts, financing, regulatory compliance, expansion, mergers and acquisitions, and succession planning. Involving an attorney early helps identify risks, avoid costly mistakes, and position the business for long-term success.

Five tips for avoiding common startup pitfalls

Regularly reviewing contracts, maintaining compliance with changing laws and regulations, protecting intellectual property, and consulting legal counsel before major decisions can help prevent costly disputes. Addressing issues early allows businesses to focus on growth while minimizing potential liabilities.

Online templates can be a useful starting point, but they are rarely one-size-fits-all. Every business has unique needs, and contracts should reflect the specific terms, risks, and legal requirements of your industry and jurisdiction.

Mergers and acquisitions involve a wide range of legal considerations, including due diligence, contract review, regulatory compliance, financing, intellectual property, employment matters, and the allocation of liabilities. Careful planning and legal guidance are essential to identify potential risks, negotiate favorable terms, and ensure a smooth transaction.

An LLC offers flexible management and could provide pass-through taxation, ideal for small businesses seeking simplicity, liability protection, and tax efficiency. A Corporation has a more formal structure with shareholders and directors, and is typically preferred for raising venture capital or sharing equity with employees (such as with stock options). Key differences include double taxation for C-corps versus potential pass-through taxation for LLCs, the availability of qualified small business stock (QSBS) for Corporations, as well as differences in the formalities applicable to each.

In a company with more than one equity holder, the owners should consider having in place an agreement that addresses restrictions on equity transfer and related matters. Such an arrangement could impose restrictions on how the owners may transfer their equity, address events that may occur (such as death, disability, bankruptcy, or divorce) that could affect equity ownership, and apply to other related matters. Having such an agreement in place can provide a mechanism to ease the process of equity ownership transfers.