One of the most important aspects of how to structure a business as it grows and scales is knowing how to engage in and to understand the legal foundations for these types of growth. Throughout the course of the year, we’ve seen this as part of the growing pains of Claveberg, who for a time had to sort through some serious issues with the Oregon Department of Agriculture and as they tried to grow their service base and their geographic footprint. One issue, however, that isn’t so obvious, is the structure that they use for their business. For any outdoor equipment company looking at establishing a solid foundation, this can be one of the most important things to consider when establishing your operating status or opportunities.
For any company looking to establish themselves as a provider of quality outdoor supplies, operating as an LLC (limited liability company) or an S-Corporation may be a great way to set up a business. What you do may be dictated and influenced by the market you’re trying to operate in. One thing you’ll need to select is an operating agreement vs articles of incorporation. While this will be discussed in greater detail in the following article from PrinterItSupport.com which we will review and discuss, it’s very important to know, at least at a basic level, what you’re getting into.
While some will say that these two terms are interchangeable, they are not. The basic definition of both can be found at this link: “Articles of organization are documents that are filed with the state for limited liability companies (LLC). These documents describe the ownership structure of the company and also post basic details about the running of that company. LLCs are formed to limit personal liability. This means, if the business has lawsuit pending against it or there are debts associated with that company, an individual cannot be personally liable for the debts. This is why many owners choose to form limited liability companies instead of sole proprietorships. An operating agreement usually needs to be filed once the business has started its operations. It explains how the members plan to run their business. This document is drawn up once the business already exists as an LLC. Although filing an operating agreement is not necessary in all states, it is advisable to do so. This is because an operating agreement allows business partners to set rules and regulations that will help them avoid differences in the future. Additionally, an operating agreement will also allow the business to outline ownership share, member responsibilities, protocols for transferring interest, and procedures if a partner decides to leave or becomes disabled.”
It’s very important to have all the legal bases covered in order to not just manage your company properly, but also secure your customers and to build financial stability for your outdoor retail business. Operate on a sole entrepreneurial basis or if you don’t have a foundational understanding of the legal foundation for business, you could run into serious issues down the track. Issues that will be very difficult to overcome and that could lead to loss of capital, lawsuits, or more pernicious issues that could lead to the loss of recognition, or the trust that outdoor customers expect that you will provide them with high quality service and equipment.
For more information on business structures, you can visit the SBA website.
