Starting today I am offering four NEW services that make it easier for small organizations to get the legal peace of mind they need.
I am introducing four all-inclusive bundles: The Non-Profit Start-up Bundle; the Non-Profit Annual Check-up; the Business Start-up Bundle and the Business Annual Check-up. I am excited to share the details with you!
After a free consultation, each bundle is custom-designed for the individual organization. Hiring a lawyer to handle each of these services on an ad-hoc basis can often bring legal bills to of upwards of $15,000. By bundling these services together I build a strong knowledge of your individual organization and form a great relationship with the staff. Think of me as an in-house counsel you don’t pay a salary!
An added benefit is that the fee is fixed upfront, so you know exactly what to expect. Because I am tackling many of your issues at once I am able to offer the bundle at a reduced rate. Some of the bundles start as low as $4,500 and payment plans are available. Highlighted services in some bundles include:
- Drafting and Filing or Review of Initial Documents
- Four, hour-long consultations over the span of 4 months
- Drafting or Review of contracts
- 501c3 Drafting Assistance and filing with the IRS (for not-for-profit clients)
- Board Consultation, Development and Training (for not-for-profit clients)
for more detailed information about the packages.
If you are contemplating starting a new venture with someone else one of the first questions to discuss is how to divide the equity and profits. Everyone thinks this topic is easy-peasy. Your business will be HUGELY successful, there will be tons of money to spare and a 50/50 split of $1 Billion dollars is still a heck of a lot of money. So you and your partners agree to split everything evenly before addressing what the everyday, real work is going to look like.
In actuality, the dream is usually not as you initially anticipated. This is why talking about a partnership where equity is divided differently is important. Without a doubt, this is a hard conversation to have with people you want to work with. It is imperative, however. Here are 3 reasons why partnerships are almost always not equal.
1) You and your co-partners will not work the same hours. Most times you and your partners are at different stages in life. One of you may be starting a family or seeking a promotion at a full-time job or juggling two part-time jobs. Someone may be unemployed at the time and able to devote 100 hours a week to the new venture. Often, time equals money, and the partner putting in more hours may want to think about whether she is comfortable splitting the profits with a partner who can’t devote full-time hours to the new venture.
2) You and your co-partners have different skills. It almost never makes sense to partner with someone with the same skill set as yours. After all, if BOTH of you know a lot about web design and no one knows how to manage the books or recruit clients, then the business won’t go very far. These varying skills often have different values to a start-up company. You and your partner should discuss the value your skills bring to the long-term goals of the company and how that value relates to the success and profits of the company.
3) You and your co-partners are contributing different amounts of capital. Start-ups cost money. There are the filing fees, the cost of development and networking, not to mention product development and market research. All of these cost cold, hard, cash. People have different comfort levels with regards to how much they are going to pay forward without a guaranteed return. If one partner is willing to commit more funds (or find people who are willing to take this risk) this might lead to that partner believing he is entitled to more profit. This is a conversation you want to have BEFORE committing yourself to an even split.
These points suggest that you should have a long discussion with potential partners before agreeing to any split in writing. Instead of assuming an equal split, each partner should sit down individually and address where she feels her time, skills and money lie in regards to the start-up. Then the partners can have an open conversation about where things should start. A good partnership agreement can set out timelines for changing the profit structure over time or if circumstances change. The key is to set something down in writing that works for the current situation but is flexible enough to change when needed.
I am all for not-for-profit organizations. Many of my clients have brilliant ideas for how to improve the world and forming a not-for-profit is a great way to attack some of society’s ills. Without being a Debbie-downer, I want to caution that forming a not-for-profit is hard work! I suggest you consider some things before you commit yourself to full-fledged not-for-profit status.
Think about these questions BEFORE filing any official paperwork:
1) What state do you want to start in? Even if you plan on going national or international at some point, you are going to have to incorporate in one place. Choose a location where you will be focusing your services on or where you will focus your fundraising efforts or, ideally, both.
2) Who will be on your board of directors? In New York, not-for-profits must have at least 3 members. Being on a not-for-profit board comes with some legal responsibilities so you should understand what you are in for (as a potential board member) as well as what you are asking your friends or colleagues to sign on for.
3) How will you run your organization? After filing the Articles of Incorporation in New York State your board should enact by-laws. These rules set out how the board will make decisions. Some things are routine, but other things, like whether you want a board that meets in person, may matter more to you. The entire board should participate in drafting these.
4) How will you manage your finances? If you will be seeking 501c3 status, you need someone who is savvy in accounting to help you document the money you will have coming in and going out. Set yourself up with someone early on so that they can keep you from making financial mistakes that may cost you down the line.
If you have solid answers to these questions, you are well on your way towards being ready to incorporate as a Not-for-Profit. Managing a not-for-profit means more than just doing good for humanity, it also requires being smart about the legal and financial obligations you are committing to in the future.
Over the past few years I have worked with a lot of people who want to start LLCs, not-for-profits and incorporations. Even before we meet, I can guarantee that one of the first things I hear will be: “My friend/relative/acquaintance told me I should file in Delaware because it will be cheaper because of taxes.”
I don’t know who this person is that is spreading these rumors, but I wish he or she would stop.
The truth is that for most businesses filing in Delaware does not save any money. Instead, you should form your business (and file the appropriate papers) in the state where you will actually be running your business. Before you buy in to the Delaware hype, consider where your offices will be, where you will be opening your shop or where the majority of your clients will be based.
Your home state (you know, the one where you will actually be operating your business from) will want to see documentation that you are registered to do business THERE . If you are doing business in New York (for example), meaning opening a bank account, interacting with customers, signing a lease or seeking a license, the State of New York wants you to be registered there (and other states feel similarly).
Only now that you have formed your business in Delaware (and paid Delaware all the filing fees) you now have to register as a “foreign corporation” in order to operate in your home state. To register as a foreign corporation you will often have to pay the EXACT same amount of money as if you had just formed the company in your home state. So essentially your business ends up paying the State of Delaware AND your home state.
So how can start-ups save money?
Believe it or not, the most cost-effective choice for most small start-ups is to register their company where they will be doing business.
The idea that you can save money by registering in Delaware is a MYTH! In short, get all the facts before you jump on the Delaware bandwagon.
I hope you find this useful and that it saves you money. I know a lot of people who wish they would have known about this before registering (and paying in Delaware AND then again in their home state).
In the current economy, a lot of individuals have considered branching out and starting a business on their own. Many people who start a business by themselves spend a lot of time planning how they will make money: deciding what they will sell, how they will reach there customers, and how they will manage the day-to-day operations. Another big business decision is what to call yourself.
Many people have the mistaken belief that if they do a google search and find a website address is available then they can use this as their business name. If, however, you plan to operate a business under anything other than your own name, the law does have a say. In New York State you must file a Certificate of Assumed Name with the government and tell them what name you will be using. The form is only one page and the fee is low (only $50). This step can be crucial, though. If you enter into any contracts under the name of your new business (for renting space, hiring employees, or purchasing supplies and materials) and you have not filed the form, all of those contracts could be completely voided and/or unenforceable. Unenforceable contracts means customers can demand refunds, landlords can change the terms of a lease, and suppliers can back out of promises. Don’t get caught with a document that cannot be enforced. The time and cost of the Certificate of Assumed Name is well worth the effort.