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Tuesday, May 1, 2018

Small Business Blog: Businesses need both accountants and attorneys

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Some business owners are intimidated by the cost of working with an attorney to form a new business. In fact, they may forgo professionals altogether to take a DIY approach to forming a business. If you have any risk of getting a lawsuit or an audit, which all businesses do, you should work with an attorney from the onset and not when things have already gone awry.

The purpose of forming a business entity

Two of the primary reasons why individuals form separate business entities are: (1) for tax purposes and (2) for limited liability protection. Accountants can help you with the first, but they are limited in their means to help you with the second. An attorney will help you maintain your business’s corporate formalities in order to protect your personal assets from your business ventures.

If your business does not maintain corporate formalities such as by complying with its bylaws, articles of incorporation, and/or operating agreement, the business owner is at risk of losing the business’s limited liability protection. This means that the government and the business’s creditors can potentially seize your personal assets, including your house. As businesses are inherently risky, business owners should have an ongoing relationship with their attorney to take the necessary and precautionary steps to legally protect their personal and business assets.

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Working with an attorney from the beginning and maintaining an ongoing relationship with her is akin to having insurance coverage so that when something goes wrong, you do not have to pay ten, twenty, thirty times or more out of pocket to pay for the expenses. Businesses fail and get audited every day. If you have legally maintained your business as a separate legal entity, your personal assets are not at risk. If you took a DIY approach or worked solely with an accountant, however, consider consulting with an attorney. At Kimberly Shin Law Firm PLLC, we offer business audits so that you know whether your business is fully compliant with its legal responsibilities.





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