When forming a business, there are a number of issues which come into play. First are the decisions whether to actually open the business and where. While it’s not part of the legal advice, after living in Bend (except for time off for schooling and good behavior!) since 1969, I have seen enough trends come and go to at least want to put my two cents’ worth into the discussion.
Once a site is chosen, the next issue is deciding whether it is being purchased, leased or rented. Problems can arise in any of these agreements. If the business is starting from scratch, there may be equipment to purchase. If an existing business is being purchased, decisions must be made as to whether the business will be purchased, or assets will be purchased. Business agreements include apportionment of the purchase price among the various assets purchased.
The business entity to be used is a consideration as well. A new business can be a sole proprietorship, a partnership, a limited liability company, or a corporation. Deciding how the business will be taxed is a consideration with limited liability companies and corporations. Limited liability companies offer “limited liability” as well.
Limited liability is protection of owners’ personal assets from claims against the business. In tort cases it does not protect the individual causing the damage, so in small companies, the limited liability is, well, limited. Further, many creditors will require personal guaranties before extending credit to limited liability companies or corporations.
Once the business entity is decided upon, there are documents to draft and file with the state and federal government to form the business, and make elections. Registration is required with the IRS and the State of Oregon Department of Revenue in many cases.
Employees bring an additional set of issues.
Finally, there are particular requirements for certain businesses. For instance, registration with the Construction Contractors’ Board, securing workers’ compensation insurance, liability insurance, and a bond are additional requirements for many builders and related professionals.