Considerations when Starting a Family Business in Connecticut
Dec. 31, 2020
If you are like many people, you see business ownership as a means of determining your own destiny and creating a legacy. A family business can be a great way to ensure that you get to work with your loved ones on business ideas that you feel passionate about. The benefits of business ownership are considerable. However, starting a family business also involves substantial risk. When starting a family business, it is important to work with a skilled business law attorney so you can avoid mistakes that can lead to legal problems and financial hardship.
Choose a Business Structure and Develop a Solid Business Plan First
For many aspiring business owners, one of the biggest appeals of starting a business is having a great deal of creative control over the business. You may be eager to name your business, start social media and marketing campaigns, and begin developing your products and services. However, the best way to ensure that your business will be as successful as possible is to first develop a business plan. As the saying goes, failing to plan is planning to fail. Your business plan should include information about:
Your vision statement
The organizational and management structure
The chain of command
Each family member’s role in the business
How compensation is awarded to employees
An exit plan
A succession plan
You will also need to determine the type of business entity that your business will be. Many family businesses are structured as limited liability companies (LLC). An LLC offers liability protection and is taxed as a pass-through entity, meaning that business revenue is taxed through the owner’s personal taxes. The type of business structure you choose will depend on your business goals and personal preferences.
Keep Business and Family Matters Separate
There are many legal and financial consequences of starting a family business. However, there are also many personal issues that many of these types of business owners run into. One way to help avoid problems within your family-owned company is to make sure that business concerns and family matters are kept as separate as possible. Carve out time to spend with your family outside of company time. Use separate bank accounts for personal and business expenses. It is also important to treat family members and non-related employees the same. Showing favoritism can lead to tension and even possible legal consequences.
Contact a Stamford, CT Family Business Lawyer
If you are thinking about starting a family business in Connecticut, there are many issues to consider before embarking on this type of endeavor. That is why it is essential that you contact The Law Offices of Peter V. Lathouris, LLC. A skilled Fairfield County business law attorney from our firm can help you choose a business structure, develop a business plan, draft financing agreements, and contracts, and much more. Call our office today to arrange your free consultation.