Rockville, MD Business Formation Lawyers

Options for Structuring a Business

One of the most important decisions to make during the business formation process will involve selecting the appropriate legal structure for the company. Different types of business entities offer different advantages and drawbacks. Our lawyers can provide guidance on the right choice based on factors such as liability concerns, tax treatment, management style, and long-term business goals. The options include:

• Sole Proprietorship: This is the simplest type of business structure in which a company is owned and operated by a single person. While it is easy to form, this option exposes the owner to personal liability for debts and obligations.
• Partnership: Two or more people may share ownership and responsibilities of a company. Partnerships can be general or limited, depending on how liability will be shared and how management will be handled.
• Limited Liability Company (LLC): This type of structure provides liability protection for owners (members) while allowing for flexibility in management and tax treatment. LLCs are a popular choice for small to mid-sized businesses.
• Corporation: This type of structure offers strong liability protection and the ability to raise capital through the issuance of stock. Corporations may be structured as C-corporations or S-corporations, which may affect how taxes are handled.

The choice of entity will impact everything from day-to-day operations to the ability to attract investors or eventually sell the business. Our attorneys can help choose the right type of structure and ensure that the proper steps are followed to register the business entity.

Key Considerations During Business Formation

During the process of forming a business, our lawyers can make sure the correct steps are followed, addressing concerns such as:

• Registering the Entity: Filing articles of incorporation or organization with SDAT is required to legally establish most business entities in Maryland. Registration also involves choosing a name, designating a registered agent, and paying filing fees.
• Corporate Governance: Every business needs rules governing decision-making, ownership rights, and management authority. We can help create bylaws, operating agreements, and shareholder agreements to provide structure and prevent disputes.
• Capital Structure: Deciding how ownership interests will be divided and how capital will be raised is essential. We can assist with allocating equity, addressing voting rights, and determining how profits and losses will be distributed.
• Buy-Sell Agreements: These agreements outline what will happen if an owner or partner wants to sell their interest in the business. They can also address situations such as the incapacitation or death of a partner and provide stability by ensuring that there is a clear process followed during ownership transitions.

Additional Factors to Address When Starting a Business

Beyond the initial registration and governance documents, entrepreneurs must consider broader issues that will affect operations and compliance. Our attorneys can provide guidance on the best ways to handle issues such as:

• Jurisdiction: The state where a business is registered will affect reporting obligations, taxes, and regulatory requirements. Some businesses may benefit from forming in Maryland, while others may consider incorporating in states such as Delaware to take advantage of favorable corporate laws.
• Taxation: Businesses will have federal, state, and local tax obligations. The chosen entity structure will influence whether income is taxed at the corporate level, passed through to owners, or treated differently for self-employment purposes.
• Licensing and Permits: Businesses in certain industries will need to obtain licenses or permits that will allow them to perform various activities. For example, restaurants must secure health permits, while contractors must be licensed under Maryland law. Our lawyers can assist with applications and make sure a business meets all requirements to operate legally.
• Industry Regulations: Healthcare providers, financial service companies, and other regulated industries may have additional compliance requirements. Failing to address these at the formation stage can lead to fines, liability, or restrictions on operations. We work with business owners and partners to ensure that they can maintain compliance with all applicable regulations.

Benefits of Working With Our Experienced Business Formation Attorneys

Starting a business without proper legal guidance can expose owners, partners, or investors to unnecessary risks. Disputes may arise that could affect business operations, or regulatory penalties may lead to financial losses or restrictions on business activities. The attorneys at Fox & Moghul have extensive experience in helping startups build strong foundations, and we can take steps to ensure that owners and investors will have the proper legal protections.

Our history of working with entrepreneurs, family businesses, and investors has allowed us to address issues unique to startups, such as structuring equity arrangements among founders, protecting intellectual property, and creating agreements that prevent disputes before they arise.

In addition to our experience helping clients address business law concerns, our attorneys provide education for other lawyers, sharing our knowledge and ensuring that they can provide effective legal services for businesses. Among other continuing legal education (CLE) seminars, Attorney Faisal Moghul has presented on the topic of "Protecting LLC Assets: Understanding Charging Orders and Asset Protection Strategies." With our understanding of the legal concerns that may affect business owners and partners, we can provide our clients with the tools for ongoing success.

Contact Our Rockville Business Formation Attorneys

The decisions made when starting a business will have a lasting impact on the company's future. At Fox & Moghul, we can provide the legal support needed during the business formation process, ensuring that a company will be positioned for success. Contact our Rockville, MD business formation lawyers at 301-409-5316 to set up a consultation and learn how we can help establish a business that is built to succeed.