S&L Business Breakdown is a four-part weekly series featuring candid Q&A’s with the business attorneys of Stock and Leader on the life of a business from formation to expansion and everything in between.
So, you’ve developed a business plan, you’ve tested your concept, and now you’re ready to get things rolling with the start-up process. But where do you begin? Well, first things first, you need to make it official. That means things like securing financing, selecting a business structure, and registering a business name, all need to be done BEFORE you open the doors.
That’s where Business Attorney Kate Hynes comes in.
She’s got plenty of experience guiding aspiring entrepreneurs through the start-up process, and today, she’s talking business formation and what you need to know to get it right.
What are the biggest challenges in starting a business?
One of the biggest challenges for entrepreneurs is determining when to engage professionals to assist with the complexities of starting a business. So after you have your business plan in place, it’s best to consult professionals like bankers, accountants and lawyers. Bringing these professionals into the mix early to assist with structuring and planning can save your business money in the long run.
Why is it so important to select the correct business structure?
The business structure that you choose will have major impacts on your business as it determines things like the level of formality required to maintain the business structure and various tax consequences. Additionally, if you forgoe the process of forming a legal entity at the beginning of your business and decide later to form an entity, you may be subject to a number of taxes in order to transfer business assets to the newly formed entity.
What do business owners need to know about financing options?
There are many options for business owners in need of financing. Traditional financing through a bank may be an excellent option for entrepreneurs as many banks are eager to lend to small businesses. It is important to keep in mind that for traditional bank financing, the bank will likely be focused on the cash flow of the business to ensure that the loan can be repaid. If traditional financing isn’t optimal, there are other options including government-backed small business loans and private financing.
Once a business owner registers their business name, does that mean it is trademarked?
No, registering a business name with the Pennsylvania Department of State doesn’t provide you with a trademark in that name. A trademark is a special designation for a brand which requires a special application with either the Commonwealth of Pennsylvania or the United States Patent and Trademark Office. It’s also important to recognize that if a business simply registers a business name as a “fictitious name” with the Pennsylvania Department of State, the owner of the fictitious name will have no recourse against others who register the same name within the Commonwealth of Pennsylvania.