Business Frequently Asked Business Questions

What type of business entity should I form?

It depends on a number of factors such as: the number of owners will there be; whether you will have employees; your primary business activity; will you have investors and will there be other owners who will not be active in management.

What types of business entities are there?

The most common types of business entities are a limited liability company, corporation, sole proprietorship, partnership and limited partnership but there are others for special circumstances.

Do I need legal advice just to form my business?

Here is a very simple answer. You will not know if you needed advice until you find out you made a mistake. It is almost always more expensive and more trouble to fix a mistake than to get advice and do it right the first time.

Does my business need a separate tax identification number?

If you intend to operate as a sole proprietorship you may simply use your social security number, otherwise a tax identification number must be obtained from the IRS for your business entity.

Is my personal liability protection the same no matter what type of entity I form?

No, your personal liability depends upon the type of entity you select and how you conduct your business.

Protecting my personal assets from creditors is very important. What is the best way for me to do that?

First choosing the right type of entity such as a limited liability company, corporation or limited partnership is important for liability protection. But you can provide yourself even greater protection by creating a more complex business structure and insuring your business properly. Finally, you must follow important guidelines in how you personally operate, sign documents and represent yourself to the public and your creditors.

How do I make sure my business will continue to support my family when I die?

First, you must create a business succession plan with the proper documents including a will and possibly a trust. You also need to create detailed instructions, secure access to information and have the cooperation of someone to step into your shoes or a liquidation plan. Insurance may also be a very useful financial tool.

Legal Zoom and other online business formation companies offer cheap services and forms. Why would I not just use them?

After going through the online process with a national online company I found a number of shortcomings. You should consider these factors before deciding whether an online legal services company is your best choice:

  1. They do not analyze what type of entity is best for you.
  2. They do not discuss the levels of liability protection available to you nor how to conduct your business for maximum protection.
  3. Their online applications do not discuss your business goals with you.
  4. If you do call to speak to someone on the phone, just who are you talking to and what do they know about Pennsylvania law?
  5. Will you get to speak to the same person each time you call?
  6. You will not have the chance to see the form contracts they offer you before you buy them.
  7. The contracts you buy from them will be one-size-fits-all and may very will contain provisions not appropriate for your situation.
  8. They will not advise you about the local regulations, such as zoning, which may restrict your business operations or prohibit it altogether at the location you choose.
  9. The information they request in order to prepare an agreement between multiple company owners is scant and is very unlikely to result in a very good agreement for you. And then, who will answer your questions?
  10. They do not discuss your business succession or liquidation plan.
  11. The list goes on.

How long does it take to get Pa. LCB approval of a liquor license transfer?

My experience has been that it will take at least four months assuming every part of the application process is handled promptly and accurately. It is usually longer.

I have been told by local official that zoning does not permit me to locate my business where I want. Is there a way to get around this?

You have the right to appeal a local zoning officer’s decision to the zoning hearing board. Your chances of a successful appeal depend on the type of business you want to start, the language of the zoning ordinance and a number of other factors.

How long will it take to get zoning approval for my business location?

It will vary. If your business use is permitted you might get a permit in a week. It could take longer if the zoning officer needs detailed information before making his decision. If the zoning officer denies your application and you appeal to the zoning hearing board it will take at least 30 and more likely 60 to 90 days until you get a hearing and a decision.

Is it important to have written contracts with my employees or independent contractors?

Many times there is no advantage to an employer in Pennsylvania having written contracts with his employees but there could be if provisions such as non-compete and confidentiality are important to protect your business. On the other hand, it is very important to have written contracts with independent contractors. One of the main reasons is to detail why they should not be treated as your employees by the taxing and unemployment compensation authorities. You may find, after talking with your attorney, that the person you wish to classify as an independent contractor will likely be considered an employee by those authorities. It is to your advantage to know this in advance. Perhaps some adjustments in work description, compensation or oversight may save you money and headaches.