Business Startup

Four Important Considerations When Launching a Startup

Today’s post highlights some of the key considerations that founders of any startup company should have in mind as they begin the process of turning an idea into a business. The action items we discuss in this post are simple things to address early on in the company and can have immediate and lasting positive impacts for the company and its founders.

Forming a Corporation or LLC to Limit Personal Liability

One of the first steps the initial partners should take is to form a limited liability entity (either corporation or LLC in most cases) in order to limit the owners’ personal liability. Forming the entity will also open the door to discussing the initial ownership percentages, vesting provisions, and management rights....

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Business Startup

Washington LLC Formation Checklist

The Washington Secretary of State has created a streamlined process for businesses to create limited liability companies. If you’re forming a LLC in Washington, the following Washington LLC formation checklist might be helpful to review to ensure you consider the steps for proper LLC formation:

1) Check the Business Name. Before settling on a business name, you’ll want to make sure that the name is available and conforms with statutory requirements. An easy way to check if your name is available is by running a business search here.

2) Certificate of Formation. Prepare and file the Certificate of Formation with the Secretary of State to “create” the LLC. You can file the Certificate of Formation online here. When you file your Certificate...

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Business Startup

Changes to the Washington Limited Liability Company Act

Earlier this year, the Washington state legislature unanimously passed and the governor signed legislation making changes to the Washington Limited Liability Company Act—the most sweeping changes to Washington LLC law in recent history.

The Washington State Bar Association requested that the state make changes to the Washington Limited Liability Company Act. The bar association’s goal was to make the law easier to understand and more flexible by modifying provisions that the association described as creating pitfalls and unnecessary problems. The Washington state Senate and House eventually passed legislation making those changes, and Governor Inslee signed the law on May 7, 2015. The new changes will go into effect on January 1, 2016.

Some of the major changes to the Washington Limited Liability...

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Business Startup

Brewery Law 101: Operating Agreements

Once you’ve chosen the right entity for your brewery or distillery, you’ll need to draft some key contracts governing your business entity. Today, we will continue our Brewery Law 101 series by discussing operating agreements. As we discussed in our post on brewery entities, an LLC likely is the right choice of entity for your brewery or distillery. So we will focus on operating agreements, as operating agreements are the primary governing document for an LLC. (While we are specifically discussing operating agreements, many of these issues will carry over to the governing documents you will want for any entity type.)

One of the most appealing attributes of the limited liability company and why it has been so widely adopted is the...

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Business Startup

Why an LLC Taxed as an S Corporation is an Attractive Option for Businesses

As we’ve discussed in previous posts, the limited liability company (LLC) entity offers a ton of flexibility when organizing the management and economic structure of the company. Because of this flexibility, the LLC has quickly become the most popular entity to form when seeking limited liability protection for new businesses. Below we’ve highlighted one important consideration when forming your LLC: whether to elect to be an LLC taxed as an S corporation. 

Distinction between LLC and S Corporation

It is important to understand the distinction between an LLC and a S corporation. An LLC is a specific type of limited liability entity that is governed by state statutes and offers the owners (also known as “members”) limited liability protection when conducting business...

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Business Startup

Getting Back to the Basics: Choosing the Best Entity For Your New Business (Part 2): LLCs and Corporations

In our first post in this series on choosing the best entity for your new business we explored sole proprietorships and partnerships. Today’s post will highlight two additional business entities: the limited liability company (LLC) and corporation.

Flexibility is Key for the LLC

An LLC is a legal entity in which one or more individuals (“members”) have limited liability for the business’ debts and obligations even if they participate in management of the company. Members of an LLC have great flexibility in structuring the operation and management of their venture through the LLC’s governing document, known as an operating agreement. If the LLC does not draft an operating agreement, its activities will be governed by state statute.

For tax purposes, an LLC is...

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Contracts

A Partnership Agreement: “You should have it in writing”

Two close friends decide to start a company. They agree on just about every issue, including how the business should be formed and managed. They are ready to launch, make money, and grow their idea into a sustainable business. Each partner has an equal stake in the company, and they’ve decided that each will receive equal compensation as well. They want it to be simple, no lawyers, no accountants, no additional partners, etc. You get the picture, right?

Both partners trust each other, and neither has any reason to believe that their relationship will deteriorate. What they haven’t taken into account is that circumstances change; life is not predictable, and neither are the twists and turns that many businesses (and their...

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Business Startup

LawMeets to Offer Free Online Business Law Courses

Back in 2009, Drexel University Earle Mack School of Law professor Karl Okam0to developed a transactional law competition where law students competed to negotiate the best deals for their fictional clients. Due to its popularity, Okam0to expanded the competition in 2011 by launching LawMeets, a free website that provides transactional simulations to law students. The students submit videos in which they offer legal advice to solve the business scenario. The videos are peer-rated and the best videos receive expert analysis.

Recently, LawMeets received a $500,000 grant from the National Science Foundation to further develop its offerings. In October, LawMeets will expand its offerings with a series of free online courses that combine lectures and simulations that explore the more intricate elements of...

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