Posted on 02/22/2016 9:32:52 AM PST by Alberta's Child
I am looking to make a transition in my career this year, and I am starting the process of setting up my own consulting business in my industry. I've got a reputation and track record that my clients seem to value, and I'm looking to break free of the constraints of my corporate role.
I will be working with a lawyer and a CPA once I get a little further down the road here (probably when I am ready to get an EIN#), but in the meantime I'd be interested in getting input from other Freepers who may have followed (or tried to follow) a similar career path:
Just a few background items:
A. I am a civil engineer by profession.
B. My highest attained degree is an M.S.
C. I have been working in this field for more than 20 years.
D. I consider myself "business savvy" in my field, having worked in a corporate/managerial role for almost five years.
My early action items in this effort include decisions on the following:
1. My intention is to set this up as a limited liability company (LLC) under the laws of my state, but I know this designation has no meaning under Federal tax law. If the LLC gives me the legal liability protection I need, is there an advantage to establishing this venture as a corporation, as opposed to a sole proprietorship or partnership?
2. I have a small number of potential partners who are not able to make this leap right now for a number of reasons (risk tolerance, other commitments, family matters, etc.). If I set this up as a sole proprietorship, would I be able to convert it to a partnership without closing down the LLC and starting another one?
3. Are there any unique challenges with establishing an LLC in one state and conducting business in another? I'm thinking particularly of maintaining the liability protection in State B if I am domiciled in State A.
4. Are there any special risks or financial considerations if I start this venture as a home-based business? I have already done research on this through my local zoning code, but I have a number of clients who would be great points of contact for short-term or temporary office space with shared administrative staff and meeting space, if necessary. I just don't want to make any commitments until I have some contracts established for short-term revenue.
5. Any other thoughts, ideas, or advice related to the start-up process before I get the lawyer/CPA involved?
Your most stalwart boosters and friends will be others in business, including plumbers, delivery services and the kid at the office supply store. Nurture these relationships.
Never trust a lawyer. If you must soil your hands with one, outline, in excrutiating detail, what you expect the lawyer to accomplish. Tell the snake exactly what you will spend for his services. And if he spends a penny more, it can only be done with your written approval.
GET IT ALL IN WRITING. Make the shyster sign it.
Save every correspondence and stamp it with the time and date. Record everything. Throw nothing out dealing with your relationship with the snake, including restaurant receipts, matchbook covers and napkins from lounges.
Good luck.
Talk to a business attorney. They will advise you about the pros and cons of various forms of organizing, LLC, S-Corp, etc. State laws regarding LLC’s vary and the ownership of the LLC can have tax implications (one individual, multiple individuals, a corporation, some combination). They’ll also help with your articles of organization and registering with the state. They can help draft contracts. A solid contract template is key. You need to protect yourself to the greatest extent possible. It might be worthwhile to go through several iterations and work with several attorneys when developing the base contract template.
You’ll also need to register with your county and/or city. Talk to your attorney.
If you work out of your home there may be restrictions or requirements imposed by the municipality (parking, for instance). It will probably depend upon the nature of your business.
Then there’s insurance.
Your social life will change.
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