QUESTION

how do i get started,setting up an LLC. INC. and how much do i need to get moveing.

Asked on Jan 15th, 2013 on Business Law - Ohio
More details to this question:
It is a security business i'm putting together. I went to be invisible. I went to own 45 percent if the stock. 20 percent to silent partner,5 percent to employee and I went to sale 30 percent to help finance this business. and is this were i start or do i need a business plan set up first. and last how much do i need to take care of my legal fees.
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1 ANSWER

Taking your questions in order: Practically, if you want to raise money to fund a startup, you will likely need a business plan to be able to sell your potential investors on becoming actual investors.  A business plan doesn't necessarily need to be complicated, but it should answer their questions.  Be careful, however, as telling them what you are doing is one thing, but actually selling them on how good of an investment this is going to be is another which takes me to your second question; How much money you will need for legal expenses will depend on a lot of variables.  First, what do you expect your attorney to do, just fill in the blanks on the form that is filed with the Secretary of State?  You can do that yourself, just go to http://www.sos.state.oh.us/SOS/Businesses.aspx.  There is a lot of free advice there and the forms to be filed are available for free.  There are other important issues where attorneys actually earns their keep.  There are other documents (which have different names depending on the type of entity you choose), the choice of type of entity, the issuance of stock, the share journal, tax registration (you may have your accountant do this portion.  You will want to take with your accountant on the question of whether you want to elect Sub-S treatment, meaning that the company becomes a tax pass-through--shareholders pay tax on the income at their personal rate rather than the corporation paying its own tax FIRST then the shareholders paying tax--there are pros and cons to each).  There are several other issues.  One huge issue is the number of shareholders you anticipate having and whether they will all be Ohio residents.  If you don't fall under the "3-O exemption" of http://codes.ohio.gov/orc/1707.03 you will have to register the securities.  If you have to register the securities with Ohio, you will also have to register them with the SEC (something you DON'T want to do as it is WAY too expensive).  Because you don't want to lose this exemption, you will have to keep your initial shareholders under 10 and abide with a lot of other rules.  If you are having an attorney help you with the standard items, your fee is likely to be in the few to several hundreds of dollars.  If you aren't eligible to take the 3-O exemption, your fee will be tens of thousands of dollars, meaning that unless you are raising hundreds of thousands of dollars, the cost is just too high.  
Answered on Jan 22nd, 2013 at 12:27 PM

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