Bergmann Law LLC

Complex issues, simplified

Tag: new business

Forming a new company? Read this first…

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It takes a unique person to strike out on their own and no small amount of risk to dive head first into a new endeavour. Helping new business owners is one of the best parts of what we do here at Bergmann Law because starting your business out on the right foot is so important.

Thanks to the internet, it has never been easier or faster to get your business up and running. The IRS and many state governments have online portals allowing you can register your new company with the state and federal governments and eliminating eliminates many of the old delays in formation like long processing times, postage fees, and delays as old copy files were shuffled from desk to desk.

Unfortunately, these new electronic filing systems make it easier than ever to make a mistake. A mistake that can be costly to unwind and cost you precious lost time.

Since the registrations have come online, an increasing number of clients reach out after attempting to set up their new business online and instead are left with a partially formed company. Clients who believe the new entity is registered, when it is not or worse, not reserving the intended name only to find out it is not available after paying a web developer for a website. Clients who were once hesitant to spend the money for help with initial set up always spend much more to undo, redo, or fix incorrectly filed paperwork.

For example, a client came to us with a registered EIN, the federal employer identification number, but no business formation documents. It turned out the name was not available in New Jersey meaning the business formation could not be completed. Instead we started over with a new name and EIN as well as work with the IRS to retire the unusable EIN.

Another client created an LLC in New Jersey, but did not register for an EIN and did not register with the state for tax purposes. To complete the process, phone calls to the state to confirm what part of the process was complete and what wasn’t had to be made and the filed forms had to be updated to include proper information that the client missed.

Save yourself both time and money. Give us a call to help you set up your business quickly and painlessly- just as it should be!

My Business Partner and I Are Both Successful and Friends – Why Ruin it With an Agreement?

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If you are starting a business with your friend surely a written agreement defining your business relationship is unnecessary. After all he has watched your children, stood next to you at your wedding, sat up late with you through college finals, so what could possibly go wrong?

Not so fast.

Even though a partnership agreement, if that is the legal entity you decide to form, is not necessary to start a business, it is good advice to write down the parameters of your business relationship, even if that partner is your best friend.

Partnership agreements deal with numerous decisions upfront and help you and your new partner both think about and deal head on with the issues of a business relationship that may not have occurred to either of you as friends. You can decide, in writing, how all allocation of profits and losses will occur, how the partnership will make decisions, divide up management duties, discuss the possibility of admitting new partners in the future and lay out terms to wind up business if things do not go so well.

By deciding these issues before-hand, both members of a new venture will be fully aware of exactly what to expect, and how to handle the wide variety of issues that come at you every day in a new business. Having these decisions in writing also avoids the possibility of future disputes.

Agreements do not have to be complex, or expensive to craft.  It can be simple and clearly worded and include as much or as the little as you and your business partner want to address.  It is, of course, malleable and should be revised as both your circumstances and business opportunities change.

But partnership agreements and other business agreements not only preempt the possibility of litigation when disputes arise among business owners. In the sad event your partner dies, a pre-determined buyout or succession plan ensures the business will continue after your partner is gone. Not having to deal with these big decisions because you addressed them in advance will not only keep your doors open, but perhaps make dealing with the loss of your friend a bit easier.

So just because you trust your new partner- and trust them you must – and have a long and affectionate past with him doesn’t mean that a business agreement between you is frivolous. Quite to the contrary – it should be part of your business plan as you begin any new venture – rather than a negative or unpleasant conversation. In fact a written agreement between friends, now business partners, could end up saving not only your friendship, but keep the business alive for future generations!

Bergmann & Good is well positioned to both counsel you on the necessary terms for the form of entity best suited for you.  Call us if you would like to learn more.  It’s much less expensive to be structured correctly as you start your venture than calling because your former friend and partner has sued you and suddenly you need a lawyer.