Every day, we work with entrepreneurs and change makers building great organizations. Here are a few common questions we hear, and the general answers to those questions.
Should I incorporate? It depends on what you want to do. There’s a range of entity types available to you in Washington state, from sole proprietorship to corporations. They vary in the degree of liability protection provided, and the levels of complexity and formality required. Sole Proprietorships are the easiest to form and offer the least protection for your personal assets. Limited Liability Companies are flexible and offer sufficient liability protection for many types of businesses. Corporations are more cumbersome to create and maintain, but offer a strong liability shield. The right choice depends on lots of factors, like what kind of business you intend to run, what regulatory schema it may be subject to, whether and how you plan to involve co-owners, and whether you intend to seek capital investments.
What’s the deal with Delaware? For the last century, Delaware has been a haven for US corporations because of its favorable corporate law and unique Court of Chancery. According to Delaware’s Division of Corporations, two-thirds of all publicly-traded companies in the US, including two thirds of the Fortune 500, are incorporated there. Delaware corporations seem to be the favored entity among venture capital firms. If your plans are to build a company that will seek VC investment and ultimately go public, you might want to consider a Delaware corporation. Otherwise, incorporating here in Washington where you run your business might make better sense.
Do I need a business license? Almost without exception, yes. Even if you’re a sole proprietor, you need a business license to do business in Washington state. You probably need a city license, too. Do not neglect these.
I need to build a team, but I don’t have my hands on any capital.
Should I trademark our business name or logo? Maybe. Are they unique, and are you worried that your customers could be confused if they see someone else using them? A trademark is a word, phrase, symbol, or design, or a combination of them, that identifies and distinguishes its source. If brand recognition is important to your business, you might want to consider registering your trademark for state or federal protection, and then developing a sustainable plan to manage them.
Remember, reading this blog post does not create an attorney-client relationship. We've shared some common answers to common questions, which are not offered as specific legal advice to you. If you have a question or want to figure out how any of these apply to you, contact us for a free consultation.