When one or more like-minded persons decide to engage in any type of Massachusetts business venture, it is crucial to perform proper planning at the inception of the business. At the outset, the founders (or partners) in the new business venture can avoid costly, time consuming, and frustrating issues that plague many small businesses in Massachusetts. The downside of improper planning and preparing for the different contingencies that may arise during the formation and operation of business is that some of these issues turn into a dispute, and some others into litigation.
It is crucial at the outset to select the correct business entity for your organizational structure and business objectives. It is equally important to set out each founder’s status, influence, participation, and financial interest in the organization. It is recommended that, at a very early stage, that business founders discuss several issues, including the following:
What role and status will each founder have in the organization?
Will each founder participate in the day to day affairs of the organization? Will each found work full time?
Who will own certain percentages of the business interests?
What are the restrictions on the transfer and sale of the business interests?
What are the conditions for raising capital, sell business interests, and/or brining on new partners?
Will the founders contribute additional capital to the business if necessary to operate the business?
What happens if one of the founders contributes additional capital to the business and the other founder is unable/unwilling to do so?
What happens to the business if a founder becomes disabled, ill, or dies?
What are the conditions for removal of a founder from the operations of the business?
How can the founders separate their personal assets and liabilities from those of the business entity?
What is the desired business succession plan for the business entity?
Who will own the intellectual property of the business? (This is particularly important if one partner carries over certain patents, trademarks, Copyrights, customer lists, trade secrets, and the like to the business).
This list may be used to generate a discussion prior to meeting with one of our business law attorneys. These are some of the issues that we can address in the planning stage for your business.
Are you an entrepreneur or business setting up, or expanding in the north shore, including Lynnfield, Wakefield, Reading, Andover, Danvers, Peabody, Beverly, Woburn, or Saugus? Contact Attorney Stefan for a free consultation at 617-669-9780.