Small Business Stages

Small Business Stages

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Each small business will loosely fall within one of various business stages.  Where do you fit?



  1. Conception You have an idea for a small business and start writing a business plan.

  2. Start-up You are open for business.

  3. Home Office You are up and running your business, most likely a large portion of which is on-line, from the comfort of your home office and meeting with clients off-site.

  4. Storefront Your business requires a larger retail or office space to sell your products and/or services.

  5. Multiple Employees You have hired staff to help you run your business.

  6. Multiple Locations You business has grown to service other locations.

Legal Entity Formation

If you are open for business, are you operating as a separate legal entity?  Here are a few of the common legal entities small businesses operate as...





  1. Sole Proprietorship. Informal, Complete Control & Max Liability.  If you have not organized a separate legal entity and operate on your own, you are a sole proprietorship, by default.

  2. Partnership. Informal, Sharing Control, & Max Liability.  If you have not organized a separate legal entity and operate with one or more people, you are a partnership, by default.  There are ways to limit liability in a partnership by filing as a Limited Partnership (LP) or Limited Liability Partnership (LLP).

  3. Limited Liability Company. Formal, Flexible Control, and Limited Liability.  Formal organization filed with state which may allow a single person LLC.

  4. Corporation. Most Formal, Shareholders Control, Limited Liability.  Formal organization with state.  The two most popular corporation types are S and C.

Legal Agreements

If you are serious about your small business, you must have certain legal agreements in place.  Some of the more common documents  are listed below.



  1. Operating Agreements. Detail how you want and need to run your business.

  2. By-Laws & Corporate Minutes. Rules your business must follow and document.

  3. Buy-Sell Agreement. If you have a business partner(s), you need a buy-sell agreement - it is as simple as that.  It is a legally binding contract that lays out the details of how an owner can sell his/her interest in the business.

  4. Company Policies. Your business has a reputation, integrity, and standards.  Company policies help ensure your vision is being met at every step.

  5. Contracts. Establish and legalize the terms by which you do business with your vendors, clients, landlord, or any other person or business.  If you have a business relationship, you need a contract to cover its terms.

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Here are some Small Business Planning FAQs we have received.  If you have another question, please email us at info@wilsonlf.com and we will answer you and add the question to this list!

 

What is a small business structure?

The most important structural elements of your small business are the legal entity and agreements, insurance, and your financial system.
 

What is an EIN?



An EIN is an Employee Identification Number, also known as Federal Tax Identification Number.  It is used by a business much like a Social Security Number is used by an individual.  For example, the EIN is required to apply for a business back account, applying for business licenses, and filing tax returns.

 

Is small business planning just writing a business plan?
 

Not at all.  Although writing a business plan is a crucial first step in a new business venture, small business planning encompasses the legal, insurance, and financial structure of the business as well as reviewing the business operations on a regular basis to ensure it is operating properly.

Won't the Small Business Administration do all this for free?

While the Small Business Administration is a wonderful resource that we highly recommend you utilize for their free resources and consulting appointments, they cannot and will not give legal advice or do any of the legwork for you.  We will set-up the proper structure, systems, succession plan, and advise your business on a regular basis to ensure you are properly operating and growing your business on a sustainable basis.

Why does a small business need an attorney after they incorporate?

Incorporation is merely one of the first small steps in the establishment of a business.  All businesses would benefit from having legal counsel oversee and review how they are operating to ensure legal compliance and to minimize liability. 

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