Bring Legal Questions, More to Score Panel
Green Bay SCORE will give entrepreneurs an opportunity to question a panel of experts when it presents "Let's Talk Business," 5:30-7:30 p.m. May 6 at Rasmussen College, Green Bay.
The workshop will feature David Daul, an attorney with Wanezek, Jaekels, Daul & Babcock; Mike Hall, CPA, and consultant with QuickStart, Inc.; KaraLynne Moore, Senior Analyst with Community First Credit Union; and Bob Jahnke, owner of Top Hat Marketing, Inc.
All are SCORE volunteers.
The panel will field questions from the audience during the open panel discussion. Daul, who specializes in business law and advises and represents clients on every aspect of business, says the No. 1 question he is usually asked relates to the need for a legal entity.
"Most entrepreneurs are wise enough to know that they need something," Daul said. "About 90-95 percent of the time, it will be a Limited Liability Corporation (LLC). This is a better option for small businesses because there are few legal requirements."
With an S-Corp or C-Corp, there will be formalities such as annual meetings, bylaws, agendas and operating agreements, and if these items are neglected, it could result in the loss of recognition of the corporation. The LLC is easy to form online at the Department of Financial Institutions and has one principal necessity.
Daul said: "People need to understand that personal finances have to be separate and distinctions need to be bright and sharp. The corporation is an individual entity, and if the line is blurred, there is a question of whether there is an actual corporation here."
That means that assets and liabilities should go into the corporate name. Personal income and expenses should never be meshed with the business.
Although the LLC is likely best for small startups, the situation could benefit from the assistance of an attorney if it is a partnership. Daul says in this case, the bank likely will want to see an operating agreement that clearly defines the roles of the partners and has procedures in place for any eventuality. He cautions against downloading some boiler plate online that doesn't fit the situation.
"When you get something off the Internet, it might not be tailored to your needs. I have seen people try to use something that met the requirements of a different state and didn't comply with Wisconsin statutes," he said.
As the business grows, an attorney can assist in converting from an LLC to different type of corporation depending on the tax benefits. It's also wise to seek the advice of an attorney when preparing the variety of documents that will be used in day-to-day operations such as employee and company handbooks and policies.
Daul emphasized the importance of getting agreements and policies in writing because the world has never been in a condition where you can safely operate on a handshake.
Another major issue for businesses is the question of whether to lease or purchase real estate, and he recommends giving the business a chance to grow before making a huge investment.
"People come to me all the time, and they want to jump right in," Daul said. "Let the business grow before taking that step and owning an asset that might be hard to sell."
With the legal issues facing businesses being so numerous, Daul will be happy to talk about lease terms, social media, employee issues, discrimination, contracts, online shopping sites, product liability and any other legal topics that participants would like to discuss. Other panel members will be on hand to provide information in their areas of expertise.
Additional information and registration is available at www.greenbay.score.org.
Tina Dettman-Bielefeldt is co-owner of DB Commercial Real Estate in Green Bay and district director for SCORE, Wisconsin.