Key Harrington Barnes, PC

Business formation basics

The early stages of starting a new business in Texas are the most fraught with danger from a statistical standpoint. The reason for this, according to some observers, is the lack of foresight in answering a few questions with enough detail. Instead of envisioning only the end product, companies can be more successful when problems along the way to success are anticipated and planned for upfront. These problems include the need for backup funding sources and the culture shock many new owners feel when realizing the work and dedication required for success.

One of the reasons people dream about going into business for themselves is the ability to have control over their own schedule. The reality of ownership is that hours tend to be longer, especially at the beginning, and dedication is a requirement. The high risk of failure is also a reality for any business start-up.

The inability to secure funding at the time it is most needed is another common problem. Business formation entails a number of common expenses that are routine. Employee salaries, inventory and infrastructure, and business specific services are all ongoing. Lining up potential funding with a solid business plan in hand can mean the difference between folding and having another chance at success.

Along with addressing psychological and fiscal sources of failure, owners need to consider the threshold issue of the type of legal entity the new venture will operate under. There are pros and cons of corporations, partnerships and limited liability companies, and an attorney can outline them as well as describe the regulatory compliance that will be attendant to their formation and operation.

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