Forming a New Company with More than One Owner

Forming a New Company with More than One Owner - Attorney

What do you need to know when forming a new company with more than one owner?  What are some of the risks and issues other business startups and entrepreneurs miss that cause expensive problems or business failure down the road?  How can the Watkins Firm and our more than 40+ years of experience serving the business, science and tech, real estate and medical / healthcare communities here in San Diego and across California save you substantial time and money now, and as your business grows and prospers?

The short answer to the question “What do you need to know when forming a new company with more than one owner” is:

Download form sites and documents copied off the web will not protect your new company, let alone your own personal interests when more than one owner or “member” exists.  There should be an extensive custom-tailored LLC operating agreement or Shareholders’ Agreement and Bylaws that addresses many issues that will come up down the road such as:

  • What happens if we need to bring in additional investment or people?
  • Who is responsible for specific aspects and operational responsibilities within the company?
  • How will money be divided?
  • How will employees be effectively managed while fulfilling all of the laws and regulations imposed upon California employers?
  • How will an ownership interest be valued if an owner dies or becomes incapacitated?
  • How will ownership interests be handled if one of the members gets a divorce or files for bankruptcy?
  • How will voting rights, income and distribution be handled?
  • What are the steps to bring in capital or investment into the business?
  • How will internal or external business disputes and lawsuits be managed?

There are literally over 100 decisions to be made regarding clauses and content which should be included or not included in the final operational agreement.  Our skilled business counselors and new business formation attorneys work with you to guide you through the process.  We explain each issue, and how the matter has affected other LLCs similar to yours in the past.

If you are forming a new company with more than one owner anywhere in California we invite you to call for a free, substantive consultation at (858) 535-1511.  Draw on our more than 40 years of business experience and the advice and counsel of attorneys who have direct knowledge in your industry and scope of business.  If you appreciate the substance and value of the consultation and decide to hire the Watkins Firm, the small amount of time and investment you make up front will make a substantial difference at each step of your company’s growth.  The LLC corporate documents and operating agreement or corporate bylaws and shareholders agreement should smoothly guide you through the day-to-day operations, anticipating challenges and providing steps to easily resolve them.  Handling these issues up front makes it much easier to manage issues surrounding money or the direction of the company down the road.

Dan Watkins Founding Partner of the Watkins FirmPro-Tip: “Well, once we decide with the client on what’s best for them, and we’ve guided them through the process of questions that we ask them that lead us to the conclusion, they need a limited liability company or a corporation or general partnership or whatnot. If it’s a corporation, then we’re going to form that for them, because most people don’t understand all of the complex options, paragraphs and customization required from downloaded business formation documents. When we draft your documents, we’re your advocate. We are thinking, how can I best protect my client and achieve their goals and set them up for success as we create their corporate documents?

We start with a proven, proprietary library of business formation documents and contracts – this saves our clients a lot of money.  We don’t create things from scratch, it’s just too expensive and time consuming.  We customize existing, proven documents from our contract library when we form a corporation. Unlike when you go to the internet or some of these companies that give you a, a bland agreement, that’s neutral, we give you an agreement that is carefully crafted, customized, even biased in your favor, which is important because is you may want to have investors. You may want to sell the company someday. You may want to own the intellectual rights. You may have an invention that you’d like incorporated in that company.

On top of that, one of the big reasons for forming a company is making sure that it’s protects you. I mean, that’s the corporate veil. If your documents aren’t formed, right, if you are not set up and organized correctly, if all of the legal requirements for having a separate entity are not in place, then you’ve wasted your time and money because you will have no protection when something goes “bump.”  And believe me, after more than 40 years of experience, I can tell you: things are going to go “bump” when you least expect them to.  Your corporation is somewhat like an insurance policy.

If you do everything right, and something goes wrong, one of your business partners or employees does something bad, your personal money and assets are fully protected. You’re only liable for the amount of money you capitalize that corporation with. So that means you are protected. If you do everything right, and you can also use this corporation, sell it, merge with it and everything with it. And all of the time you try to do those things. The other lawyer who wants to do business with you is going to look at your corporate documents and say, yes, they did everything right. And it’s professional, and, by the way, more valuable!” – Dan Watkins, Founding Partner

Learn what you need to know when forming a new company with more than one owner in California. We invite you to review our podcast Episode 6 – Why Do You Need a(n experienced) Business Lawyer as well as the strong recommendations of our clients and contact the Watkins Firm or call 858-535-1511 for a complimentary consultation today. Discover how we can help to get your new business up and running quickly and efficiently, while protecting your interests and helping to lay the foundation for a successful, profitable future.