Choosing the right business entity is an important decision for entrepreneurs consideringforming an LLC, and an attorney writing at VentureBeat recommends considering all the possibilities to avoid future legal issues.
The corporation and LLC offer liability protection for owners in the event of a lawsuit. However, the LLC is relatively new, and Curtis Smolar writes that there isn’t as much legal precedence for LLCs. Forgetting a key aspect of business formation could create problems in the event of a legal proceeding.
For business owners choosing an LLC, Smolar recommends having a professional assemble the required paperwork and contracts, even if it costs a little more.
Another important aspect to consider when forming a business is termination agreements. Smolar recalled one of his clients with two partners. One partner wanted to quit the business; the other didn’t. Since there was no termination agreement, the situation created legal problems.
Having all the issues covered with a solid contract can also help with the processes of selling a business. Owner-financing is increasingly being used to entice potential buyers, and having a clear termination agreement and contract with all partners and stakeholders will assure all options are available.
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