What legal factors should I consider when starting a business?
Legal factors in starting a business: The number one that I always am concerned about when I'm advising individuals is liability. I take a look at what their business is. Someone who is, for instance, baking cookies out of their oven, they have a different risk than someone who is developing a chemical that's going to be spread on tomatoes or something like that. You take a look at all the risks and all the liability and what can come from it, and that's one really large factor. Additionally, whether or not they want to take in outside investment capital. If you were planning on taking in outside investment capital from a passive investor, or a venture capitalist, or what people call an angel investor, then a legally recognized business is going to definitely benefit you, and it's going to give you a little bit more legitimacy. It also allows for passive ownership, which some of the other ones don't. There is, though, the concept of having a legitimate business. When someone goes through the steps of forming a corporation or a limited liability company, other people can take a look at that and think that person might even be more serious or that might be that thing they really want to do. So those are the really main factors that I look at. Additionally, you think of taxes, like I said whether or not they would hire any employees, and the size of their business, some of the things that they're planning on doing with it, and, for instance, the biggest one to me, also, might be just what their goals are. Do they want to keep a small, little mom-and-pop shop, or do they want to grow this into a massive business that is going to be name-known everywhere?
