When starting a new business in the Metro Detroit area, there are important considerations regarding formation and structuring that must be addressed in order to protect yourself and your company as it grows. As such, you may find the process and your legal options daunting. A seasoned attorney can help streamline the business formation process and empower you to decide how to organize and structure your new company.
Remember, what you do now can have a big impact on your business down the road. So get the knowledgeable advice and support you need when forming a new business by contacting Bingham Legal Group PC for an initial case evaluation with a business formation attorney serving Oakland County and the surrounding areas in Southeast Michigan. We look forward to sitting down with you, learning how we can help you, and discussing your options.
Why Choose a Business Formation Attorney from Bingham Legal Group PC?
Proper structuring of your new business can help you avoid pitfalls or legal issues that may lead to unnecessary expenses or headaches or jeopardize your company before it even gets off the ground. Working with a knowledgeable business formation attorney can help you develop a legal structure for your new venture tailored to your circumstances, needs, and business goals. Here’s why you should choose the legal team at Bingham Legal Group PC to act as your guide and advocate at this crucial juncture:
- We know how hard you work to start and build your business, so we work just as hard to put you on a solid foundation to achieve financial success in your new venture.
- Our attorneys have over 60 years of legal experience providing guidance and support to clients throughout the Detroit metro area and the surrounding regions in Michigan.
- Our firm strives to offer personalized service. You will work with the same attorney throughout your legal matter, who will provide you with legal solutions tailored to your goals. As a smaller law firm that takes a team approach to client representation, you will benefit from our combined knowledge and experience, which can help you with innovative strategies and solutions while avoiding the added costs of larger law firms.
Understanding Business Formation in Detroit
The process of business formation involves choosing a legal structure for a business entity, developing the legal framework under which the business will operate, and formally registering the business with state and local governments and other relevant government agencies or industry organizations.
Options for Business Structuring
Entrepreneurs and business owners have multiple options for the legal structure of their enterprise. Each type of structure has advantages and disadvantages, so the right choice for your business depends on your needs, goals, and current situation. Common options for legal structuring for a business include:
- Sole proprietorship: With a sole proprietorship, a business has no legal separation from its owner. Although the business may operate under a trade name, it does not have a separate legal identity from the owner. While sole proprietorships allow solo business owners to avoid the legal formalities and paperwork of other types of legal structures, they offer no legal protection to owners from the business’s liabilities. A sole proprietor remains fully liable for the business’s debts and legal responsibilities.
- Partnership: Two or more people who form a business may establish it as a partnership. Partnerships come in two forms: general and limited. In general partnerships, each partner participates in the management of the business. The general partner(s) handles management in a limited partnership, while limited partners act as “silent” partners or passive investors. Partnerships allow co-owners to formalize the governance of the business and their respective rights between each other and the partnership.
- Limited liability company: A limited liability company combines aspects of a sole proprietorship or partnership with the limited liability protection offered by corporations. LLCs offer owners significant flexibility in structuring the governance of the business, as LLCs can more closely resemble partnerships or corporations or combine aspects of both.
- Corporation: A business formed as a corporation becomes a legal person separate from its owners. Corporations offer their owners limited liability protection, meaning owners bear no liability for the corporation’s debts or liabilities except to the extent of the owner’s capital investment in the business. However, to maintain this protection, corporations require owners to follow specific formalities in managing the company, including governing through a board of directors elected by the corporation’s shareholders, with the board retaining oversight over officers appointed to handle day-to-day management.
Common Documents Needed in Business Formation
When forming a business, founders may need to draft and execute various legal documents, such as:
- Organization/formation articles: Corporations and LLCs must file articles of incorporation/organization with the Michigan Department of Licensing and Regulatory Affairs to create and register the business with the state. Similarly, limited partnerships or limited liability partnerships must file registration certificates with the state as well.
- Governing document: Many businesses have a governing document that outlines the rights and responsibilities for operating the business. Partnerships have partnership agreements among the partners. The members of an LLC can create an operating agreement. Corporations must have bylaws that describe the company’s governance structure, management procedures, and the rights of the company’s shareholders.
- Equity purchase agreements: A company’s founders can acquire their equity in the business and make an initial investment through an equity purchase agreement to acquire partnership or membership interests/units or corporate stock.
- Shareholder agreements: In corporations, shareholders can make agreements among themselves to establish certain rights and responsibilities beyond the articles of incorporation and bylaws, such as an agreement to elect specific individuals to the board of directors or giving fellow shareholders a right of first offer or refusal when selling one’s stock.
- Certificate of assumed name: Commonly known as a “doing business as” registration, a business that wishes to operate under a name other than its legal name (or the owner’s name for a sole proprietorship) must register that name with the state.
An experienced attorney can discuss your business goals and needs to determine what documents or agreements you will need to form your business and start operations.
How Can an Attorney Help with Business Formation?
An attorney from Bingham Legal Group PC can help you through the business formation process by:
- Walking you through your legal options for business formation, including the types of legal structures you can choose from and their pros and cons for your specific circumstances
- Discussing specific details for structuring your business’s governance documents, including management rights, equity transfer restrictions, and procedures for changing the governance documents or the business form
- Advising you on the tax implications of your preferred business structure, including helping you understand the tax liabilities the business may face and the tax consequences for the company’s ownership
- Mediating disputes among business partners to resolve conflicts over entity structuring or specific provisions of governance documents
- Drafting and helping you execute the paperwork necessary to form and register your business with the state and other relevant government agencies
- Explaining other compliance obligations your business must follow to start operations, such as business licenses, zoning/use permits, and insurance coverage
- Building a lasting relationship to provide support and legal counsel to your business through all the future stages of its development
Contact Our Firm Today for Experienced Guidance and Advice
Forming a new business requires careful consideration of options and legal issues. Contact Bingham Legal Group PC today for an initial consultation with our legal team to discuss how we can assist you or your partnership team with founding and structuring your new business in Detroit.