Relationships Between Business Owners - Start up to Success
When a business is in the start up phase, plans often focus on how income is going to be generated in as short a time frame as possible. As a preliminary matter however, in order to protect that income once it is generated, careful thought needs to be given, before the business begins operating, as to the most appropriate ownership structure for the business. This month we will be looking at the topic of Relationships Between Business Owners and the importance of planning and managing those relationships.
Issues to consider when deciding on the best ownership structure for a business include:
How many owners will the business have and what will be the ownership split?
How is the business being funded?
Do the owners of the business hold personal assets and if so, will those assets need to be protected from the business’ creditors?
If there is more than one owner, how will the owners come to an agreement as to how the business is to be run? How will that agreement be documented?
Are there any industry specific requirements that dictate the manner(s) in which the business may be structured?
Which ownership structure is the most appropriate from a tax planning perspective?
Business owners often form a strong relationship with their accountant - but just as important is the formation of a strong relationship with a lawyer. A lawyer can – and should – act as a trusted advisor to the business throughout the business life cycle, rather than being consulted only when something has gone wrong.
It is important that the most appropriate ownership structure is put in place before the business starts operating. Attempting to retro-fit ownership agreements and structures after a problem has arisen can be difficult and in some circumstances only exacerbates the problem.
Dooley & Associates offer a free Legal Relationship Review and Strategy Session for businesses old and new. This is an opportunity for business owners to sit down and discuss their current structure, plans and problems. An investment in legal advice, at the outset, as to the most appropriate ownerships structure can help a business avoid internal and external problems (and the significant legal costs that typically result) down the track.Back